Report: The Bank of Japan may keep interest rates unchanged, but the reasons for accelerating rate hikes are not clear yet.

MFS Investment Management's Carl Ang stated in a report that the Bank of Japan is likely to maintain its policy rate at 0.75% at its March meeting. The fixed income research analyst said, "Given the high level of uncertainty caused by the Iran conflict and its impact on commodity markets, the rationale for an early or accelerated rate hike remains unclear." MFS IM's base forecast is that the next 25 basis point rate hike will take place in June, while expectations for a terminal rate of 1.75% and a policy normalization pace of roughly every six months remain unchanged. He mentioned that Prime Minister Naoto Kan's fiscal expansion agenda poses long-term inflation risks, in addition to more direct cost-push pressures from the Iran conflict.