Nisshin Securities: The mixed predictions of the Bank of Japan highlight the uncertainty of the Middle East situation.

Economists at SMBC Nikko Securities said that the Bank of Japan has significantly raised its inflation forecast while also lowering its growth forecast for the fiscal year ending in March 2027. This means that the timing of further interest rate hikes largely depends on the situation in the Middle East. In its quarterly report, the Bank of Japan stated that it will consider the timing and pace of adjustments, while closely monitoring the impact of the future direction of the Middle East situation on Japan's economic activity and prices. These economists predict that the Bank of Japan will raise interest rates in June, but caution that if the energy shortage situation worsens, the Bank may postpone the rate hike.