As widely expected, the BoJ raised the policy rate by 25bp to "around 1%" (there was one dissent from newly appointed dovish board member Asada for a hold) taking the cost of borrowing to its highest level in 31 years as the country adjusts to sustained inflation. The 0.25% increase, which was widely expected, takes Japan to what analysts said was a critical milestone in the central bank’s effort of normalizing monetary policy after years of ultra-low interest rates and deflation. The BoJ’s policy rate was last at 1% in 1995, when the central bank was in the process of lowering borrowing costs in the wake of the Japanese asset bubble burst in the late 1980s. The Board also opted to make no changes for now to their planned pace of QE taper, also in line with expectations, but likely disappointing some expectations for a shift to a higher planned pace of purchases to support JGBs
In a statement accompanying the decision, the BoJ signalled that it intended to continue that normalization process, raising the policy interest rate and degree of monetary accommodation “in response to developments in economic activity and prices as well as financial conditions”.
The policy statement showed no material change other than the view that the major downside risks to the economy have “decreased compared with a while ago”. On inflation, it pointed to “a risk of underlying CPI inflation deviating upward to a level above the price stability target of 2%”, but this is not new information given that the April Outlook Report’s BoJ core inflation forecast (ex. fresh food and energy) already implies inflation above 2% throughout the projection period through FY2028. As Deputy Governor Uchida also noted at the press conference, in terms of what has changed since the April meeting, the decline in downside growth risks appears to have been the backdrop to the decision to proceed with a rate hike this time.
Offsetting the hawkish taste of the rate hike, the BoJ also said that from April 2027 it would stop reducing its monthly purchases of Japanese government bonds, leveling off at a pace of about ¥2tn ($12.5bn) per month. That move was also widely expected by the market. The Bank noted that this decision could be changed depending on circumstances; however, if this policy is maintained, the BoJ’s balance sheet will continue to shrink, though the pace of contraction will ease from 2028 onward.
The BoJ said that while higher crude oil prices were weighing on economic activity, “the risk of a significant slowdown in the economy appears to have decreased compared with a while ago”. It also noted that the price pass-through from higher fuel prices had been progressing relatively quickly, and could spread from business-to-business transactions to push underlying consumer price inflation above its target of 2 per cent.
Since lifting Japan out of negative interest rates in 2024, the BoJ raised rates twice last year. It has been expected to settle into a pattern of gradually tightening every six months or so. Some economists believe a further 0.25% rise could come as soon as October.
The decision to raise interest rates this week was reached by a 7-1 vote of the Monetary Policy Committee, which was down to eight members after governor Kazuo Ueda was admitted to hospital last week. The dissenting member, Toichiro Asada – the first member appointed under the dovish Takaichi administration – argued that the situation in the Middle East presented Japan with greater downside risks to production and employment than the upside risks to prices.
“The distribution of votes is interesting and reflects that the board is a bit more balanced now when previously it skewed comfortably hawkish,” said Stefan Angrick, head of Japan at Moody’s Analytics. “The fact is also that the BoJ has no good choices,” he added. “They can hike to stem inflationary pressure by strengthening the yen, but that would hurt the economy.”
As reported previously, BOJ governor Ueda is receiving treatment for a liver condition and did not attend the meeting or cast a vote. This week’s meeting, the first held without the governor since 2010, was chaired by one of the BoJ’s deputy governors, Ryozo Himino. In Ueda’s absence, the afternoon press conference was presented by the BoJ’s other deputy governor, Shinichi Uchida. He noted that the major difference between this week’s meeting and the one in April, when the BoJ held rates, was the memorandum agreed between the US and Iran to extend their ceasefire
Deputy governor Shinichi Uchida led the Bank of Japan’s afternoon news conference in Kazuo Ueda’s absence“That is a welcome move,” Uchida said. “Having said that, there is uncertainty on the pace of improvement in [oil] distribution.”
Deputy Governor Uchida chose his words carefully throughout the press conference, but most questions focused on the Bank’s assessment of upside inflation risks and the implications for future rate hikes. He reiterated the policy of continuing rate hikes as underlying inflation approaches 2%, reinforcing that stance by emphasizing the perceived upside risks to inflation. He also stated that going forward, “keeping inflation stable at around 2% will be important”.
That said, differences of opinion were evident within the Board regarding the state of underlying inflation. While the statement and the press conference conveyed the view that underlying inflation is now in the process of moving toward 2%, Takada and Tamura objected, indicating that they believe it has already reached that level. In contrast, Deputy Governor Uchida said at the press conference that many of the remaining members think it will be achieved between the second half of FY2026 and the first half of FY2027.
Another notable point was Deputy Governor Uchida’s remark that “the neutral rate estimates have too wide a range to be usable for actual policy decisions”, clearly downplaying the Bank’s published estimates of the neutral rate. Governor Ueda has long pointed to the uncertainty surrounding the estimates, but Uchida made this point more explicit. He characterized the current rate hikes as “policy adjustments toward a neutral level”, while adding that “it is not clear at what point we can judge the stance to be neutral; we won’t know until we reach it”. This likely implies that, although the policy rate has now reached the lower bound of the BoJ’s published estimates of the neutral rate, that fact does not mean the Bank will become materially more cautious about further rate hikes.
Deputy Governor Uchida avoided answering a question about consistency with the fiscal policy pursued by the Takaichi administration. Still, despite his otherwise rigorous focus on logic, his explanation for JGB purchases remained somewhat coarse – namely, that “market functioning has been steadily improving, so we decided to continue with this for the time being”. Moreover, even though the decision was made after substantial prior coordination and was almost fully priced in by the market, the fact that a member appointed under the Takaichi administration cast a dissenting vote may suggest that strong resistance to the BoJ’s policy normalization may remain within the administration.
Finally, he was also asked why Governor Ueda did not have voting rights this time, even though Deputy Governor Uchida retained voting rights when he participated remotely during his hospitalization through the previous meeting. Uchida limited his response to saying it was “for reasons related to medical treatment”.
According to JPM, this rate hike will not exert significant downward pressure on the economy, and the bank continues to expect the BoJ to deliver an additional rate hike in October in response to inflationary pressures that are likely to become more apparent towards the summer.
The yen held steady at about ¥160.2 versus the dollar following the announcement, while the Nikkei 225 stock average breached 70,000 points, a record level, before falling back.
“Traders were content that there were no overtly hawkish surprises” from the BOJ, said Tim Waterer, chief market analyst at KCM Trade. “The rate hike was fully anticipated and priced in.”
Tyler Durden Tue, 06/16/2026 - 10:40Tech trillionaire Elon Musk has said he will take legal action against German public broadcaster ZDF after it linked him to unrest in Belfast and accused him of helping instigate a "hunt" against migrants.
The dispute followed the attempted beheading of a man in Northern Ireland by a Sudanese migrant, which prompted British right-wing activist Tommy Robinson to call for nationwide protests. Musk shared Robinson's post on X and added, "Only through repeated and loud protests will anything change."
ZDF later used the incident in a segment on ZDFheute live, introducing it as part of a wider discussion about online agitation after violent crimes. Presenter Christina von Ungern-Sternberg said, A brutal attempted murder in broad daylight in Belfast. Someone films it. The video goes viral. A racist mob then hunts down migrants. This was called for by a British far-right extremist and tech billionaire Elon Musk."
She then asked, "What's behind it? Which actors have an interest in using a violent crime to incite civil war?"
The framing triggered criticism in Germany, including from journalists who said the broadcaster had gone beyond what Musk had actually written. Welt journalist Anna Schneider said, "ZDF is attributing a statement to Musk that he never made."
NDR editor Sebastian Eberle also criticized the segment, writing on X, "Dear colleagues in Mainz, with all due respect, this is unacceptable. We cannot and must not work like this. This is completely unacceptable."
ZDF later acknowledged that the wording in the segment had been flawed. Asked by Nius about the controversy, a ZDF spokesperson said, "The presenter was supposed to succinctly summarize the complex situation of the violently escalating protests and the previous calls for protests on X at the beginning of the very comprehensive and nuanced 30-minute program. However, the chosen wording was imprecise and therefore misleading."
The broadcaster said Robinson had called for protests after the Belfast knife attack and that Musk had shared the post.
Musk responded on Monday by saying he would pursue legal action against the broadcaster. "Legal action is being taken against ZDF for their outrageous lies," he wrote on X.
Legal action is being taken against ZDF for their outrageous lies
— Elon Musk (@elonmusk) June 15, 2026This isn't the first time this year the broadcaster has been enveloped in controversy for its reporting. Back in February, the same program was forced to issue an on-air apology after it was found to have broadcast a segment containing AI-generated footage depicting U.S. Immigration and Customs Enforcement (ICE) officers arresting a migrant family.
"We invest a great deal of effort to provide you with verified information. This time, we failed to do so," it said at the time.
Tyler Durden Tue, 06/16/2026 - 10:20Chengxin Memory Technology, China’s leading maker of DRAM (dynamic random-access memory) chips, has had its initial public offering approved by the country’s securities watchdog, clearing the way for the Chinese mainland’s biggest stock market listing since 2022.
CXMT’s registration to go public on Shanghai’s Nasdaq-style Star Market became effective on June 12. The Hefei-based company is planning to raise CNY29.5 billion (USD4.4 billion) by issuing 10.6 billion shares, which would also make it the Star Market’s second-largest IPO.
As the only Chinese integrated devices manufacturer that has achieved large-scale DRAM production, CXMT’s IPO has attracted investment from several leading brokerages, including China Merchants Securities and Huaan Securities, as well as from insurers, through a mix of alternative investment subsidiaries, private equity funds, and industrial funds.
CXMT has three 12-inch DRAM wafer fabs in Hefei and Beijing, giving it the largest production capacity in China and the fourth-largest globally. The firm’s industrial chain includes multiple links, such as equipment, materials, packaging, and testing, and its suppliers include more than 30 mainland-listed firms with a total market value of over CNY3 trillion (USD444 billion).
Last year, CXMT bought CNY11.5 billion worth of raw materials, including CNY4.3 billion of chemicals, CNY1.4 billion of photoresists, CNY980 million (USD145 million) of silicon wafers, CNY590 million of electronic specialty gases, and CNY250 million of target materials.
The listing is expected to further strengthen China’s self-sufficiency in memory chips, while also driving coordinated growth across the full industrial chain, from upstream materials, equipment, and components to downstream applications.
While investor attention has been centered on memory makers and other key AI component suppliers in Korea, Japan and Taiwan, Chinese AI infrastructure stocks have quietly underperformed.
Commenting on the latest developments, Goldman's Peter Slater writes that last week's headline that the Chinese government plans to spend upwards of $300bn on a network of interconnected data centers may bring Chinese AI names back into focus.
Noting that just like in the US, technology independence remains a key tenet of China’s national security policy, Slater writes that not dissimilar to what we’re seeing in U.S. capital markets, China’s fast-tracked IPO pipeline will bring several high-profile AI leaders public as soon as next month:
The Goldman trader's conclusion is that "Investors may want to consider rotating into Chinese laggards with cleaner positioning and similar end-demand growth profiles in such areas as advanced packaging and optical networking and transceivers." Those who have access, may want to consider the following baskets: GSXACMEM (GS China Memory), GSXACSEM (GS China Semis) and GSXACHRO (GS China Humanoid Robots). The latter is especially pertinent in light of our recent analysis that "Goldman's Big Call Is That AI's Next Leg Is Shift From Chips To Humanoid Robotics; Here's How To Trade It"
Tyler Durden Tue, 06/16/2026 - 10:05