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BOJ Rate Hike Timeline Clouded by Iran Tensions, Nomura Warns

Market pricing suggests a 75% probability the Bank of Japan will raise rates in June, climbing to 92% odds by July, according to swap market data. However, the war in Iran may force policymakers to reconsider the timeline, cautioned Michio Saito at Nomura Institute of Capital Markets Research. Escalating tensions threaten to push oil prices higher, creating headwinds for Japan's energy-dependent economy. Rising import costs could complicate the central bank's inflation calculations and reduce appetite for monetary tightening in the near term. While traders appear largely convinced on a near-term hike, Middle East instability introduces significant uncertainty into BOJ decision-making.