Goldman Sachs: The Bank of Japan will continue to hold its ground and raise interest rates next January

Goldman Sachs expects that economic activity and price indicators released since the April monetary policy meeting continue to show a strengthening of the virtuous circle in Japan, but the impact of tariff increases may materialize in the future. From a risk management perspective, in the midst of high uncertainty, the Bank of Japan is expected to maintain its policy rate unchanged in June, while maintaining its stance of gradual rate hikes. We maintain our base case that the next policy rate hike is in January 2026. Regarding the Bank of Japan's mid-term review (to March 2026) of the current JGB tapering program, we expect the existing program to remain unchanged. After that, we expect the Bank of Japan to continue to reduce its purchases of government bonds, albeit at a slower pace, but within a year, the Bank of Japan will accelerate the reduction of bond purchases to a level of around 2 trillion yen per month, which is the scope of the Bank of Japan's response to an advance survey of market participants and is also in line with the level before the start of QQE. (Gold Ten)