Recently, I’ve noticed a quite noteworthy move by the central bank. According to informed sources, Japan’s central bank may keep interest rates unchanged at next week’s meeting, but the logic behind this is actually quite interesting—they’re not raising rates for now, but are preparing for a potential rate hike in Japan later on.

The current situation is as follows: due to uncertainties caused by the Iran conflict, the Bank of Japan might adopt a wait-and-see approach, maintaining the overnight rate decision at 0.75% on April 28. But this doesn’t mean they’re easing up; quite the opposite, officials’ stance remains very clear—they must continue to raise the benchmark interest rate as long as economic conditions permit. The financial environment is still relatively accommodative, so the central bank believes it’s necessary to stick to a tightening stance.

Interestingly, some officials actually lean toward raising rates at this meeting, arguing that geopolitical shocks could push up prices. Moreover, the Bank of Japan is also considering a significant upward revision of inflation expectations, which indicates they remain cautious about inflation pressures.

From a timeline perspective, if rates stay unchanged in April, Japan’s rate hike window is very likely to shift to June, provided economic data remains stable. These officials say they will continue to monitor developments in the US-Iran conflict, and the final decision will be made at the last minute. Overall, the Bank of Japan is currently in a very delicate position—it needs to address geopolitical risks while pushing forward with the tightening cycle. The market should be prepared for this uncertainty.