Japan Economist, Japan Macro Advisors

Takuji Okubo

Japan Economist

Concise and Insightful Analysis on Japan Economy

Japan Macro Advisors

Our mission is to provide a concise and timely analysis on the Japanese economy for the benefit of global audiences. Communication, especially in foreign languages, has always been a weakness for the Japanese, which was fine when Japan's economic might attracted foreign media and various other institutions to study and report on Japan - such days are long gone. In the last two decades, we saw foreign institutions reallocating their resources from Japan to other more exciting parts of the world. As a result, when we read reporting on Japan in foreign media, we sense a subtle but noticeable decline in the depth of understanding what is actually happening in Japan.

Macroeconomics

<ul>
<li>Governor Ueda delivered a clear hawkish message: Secondary inflation spillover is more likely than at any point in the past three decades. Delayed action now carries “behind the curve” risk</li>
<li>We revise our call. We now expect the BoJ to hike its policy rate to 1.0% on June 16, followed by two more hikes in the following 12 months</li>
<li>For June, a key surprise to watch out for is Takata and Tamura calling for 0.5% hike</li>
</ul>


Governor Ueda delivered a clear hawkish message: Secondary inflation spillover is more likely than at any point in the past three decades. Delayed action now carries “behind the curve” risk
We revise our call. We now expect the BoJ to hike its policy rate to 1.0% on June 16, followed by two more hikes in the following 12 months
For June, a key surprise to watch out for is Takata and Tamura calling for 0.5% hike


<ul>
<li>April industrial production (IP) rose 0.8% MoM, ending two months of decline. IP is enjoying a modest expansion since late 2025, boosted by AI related demand. </li>
<li>Our proprietary indices for AI hardware and AI-adjacent industry show AI boom is giving a critical life support for Japan. The AI hardware basket is up 21.9% in 2024-2026. </li>
<li>News from IP gives comfort for those concerned about Iran conflict disrupting business activities, but not enough for BoJ to decide to hike in June.   </li>
</ul>


April industrial production (IP) rose 0.8% MoM, ending two months of decline. IP is enjoying a modest expansion since late 2025, boosted by AI related demand. 
Our proprietary indices for AI hardware and AI-adjacent industry show AI boom is giving a critical life support for Japan. The AI hardware basket is up 21.9% in 2024-2026. 
News from IP gives comfort for those concerned about Iran conflict disrupting business activities, but not enough for BoJ to decide to hike in June.   


<ul>
<li>
Japan vulnerable to inflation: Ueda's historical framework places 2026 Japan — accelerating wage and inflation expectations, yen depreciation — in the zone where oil shocks could feed into broader inflation.</li>
<li>
Ueda signals BoJ needs to tighten: But with no urgency on timing. A June hold followed by a July hike is fully consistent with today's speech.</li>
<li>
Swing votes not ready: Masu conditioned any hike on absent downside data; Koeda said hard data are not yet conclusive. Neither will join the hawks by June 16. </li>
</ul>



Japan vulnerable to inflation: Ueda's historical framework places 2026 Japan — accelerating wage and inflation expectations, yen depreciation — in the zone where oil shocks could feed into broader inflation.

Ueda signals BoJ needs to tighten: But with no urgency on timing. A June hold followed by a July hike is fully consistent with today's speech.

Swing votes not ready: Masu conditioned any hike on absent downside data; Koeda said hard data are not yet conclusive. Neither will join the hawks by June 16. 


<ul>
<li>Koeda hardened her inflation assessment in today's Fukuoka speech, saying underlying inflation is already around 2% and naming upside risk explicitly for the first time.</li>
<li>Markets may read this as a hawkish June signal. We disagree: Middle East impact is not yet in hard data, and her rate language stays in the executive camp.</li>
<li>Our call is June hold. BoJ majority remains data-dependent. Some data do arrive, such as consumer indicators Koeda mentioned today. But key data such as Tankan arrives after June 16. </li>
</ul>


Koeda hardened her inflation assessment in today's Fukuoka speech, saying underlying inflation is already around 2% and naming upside risk explicitly for the first time.
Markets may read this as a hawkish June signal. We disagree: Middle East impact is not yet in hard data, and her rate language stays in the executive camp.
Our call is June hold. BoJ majority remains data-dependent. Some data do arrive, such as consumer indicators Koeda mentioned today. But key data such as Tankan arrives after June 16. 


BoJ Koeda: Another Question Mark on June Hike

<ul>
<li>No monetary policy signal. Himino's speech was entirely focused on digital finance and payment system architecture. This reduces the probability of a June rate hike, in my view.</li>
<li>He described Scott Bessent's stablecoin vision as designed to "induce people around the world to finance the US fiscal deficit", taking a mild jab at the credibility of US dollar.  </li>
<li>Japan will not follow the US toward lighter-touch crypto regulation. Himino's explicit reference to anonymity of crypto use as a "problematic motive" signals his weariness about crypto.  </li>
</ul>


No monetary policy signal. Himino's speech was entirely focused on digital finance and payment system architecture. This reduces the probability of a June rate hike, in my view.
He described Scott Bessent's stablecoin vision as designed to "induce people around the world to finance the US fiscal deficit", taking a mild jab at the credibility of US dollar.  
Japan will not follow the US toward lighter-touch crypto regulation. Himino's explicit reference to anonymity of crypto use as a "problematic motive" signals his weariness about crypto.  


BoJ Himino: A Blunt Critique of US Digital Finance Strategy

Takuji Okubo is the Managing Director and Chief Economist of Japan Macro Advisors, an independent macro-research boutique he founded in 2012, specializing in the Japanese economy and its public policies. He has over two decades of experience covering Japan macro, beginning his career as an economist at Goldman Sachs Tokyo in 1997 before moving to Merrill Lynch and then Société Générale, where he served as Chief Economist Japan. He holds an MBA from INSEAD and an MSc in Economics from Universitat Pompeu Fabra (Barcelona). In 2022, he co-authored Japan Risk, in Search for a Strategy to Survive with former Bank of Japan Vice-Governor Hiroshi Nakaso.

Takuji Okubo
Japan Economist
• Japan Macro Advisors

BoJ Ueda: June Hike Is Now A Done Deal

BoJ Governor Ueda signals June policy rate hike to 1% is now a done deal. He sees Japan having sufficient source of resilience. Behind-the-curve...

Takuji Okubo

Japan IP: AI Keeps the Engine Running

Japan's AI boom is doing what the rest of manufacturing cannot. AI hardware index is up 22% since 2024 to April 2026, while the overall industrial...

Takuji Okubo

BoJ Ueda Speech: Hawkish Message Inside

Ueda's speech was non-committal on the surface but carried a hawkish message. 2026 Japan is vulnerable for inflation risk. BoJ should tighten. The...

Takuji Okubo

BoJ Koeda: Another Question Mark on June Hike

BoJ Koeda shifted hawkish on inflation but says Middle East impact not yet in hard data. June hold. July 30–31 the more natural window for the next...

Takuji Okubo

BoJ Himino: A Blunt Critique of US Digital Finance Strategy

BoJ Himino Speech: No hints for near term policy decision, reducing June hike probability. His speech revealed a rare blunt critique of US policy...

Takuji Okubo