Japan’s GDP Beats Expectations as BoJ Rate Hike Likely Shifted to June 2026

Key Facts

1Japan’s GDP expanded more than expected in the last quarter of 2025.

2Household spending on goods and private services remains on track for January.

3The Bank of Japan is likely to delay its rate hike to June 2026, standing pat in April.

Japan’s economy demonstrated unexpected resilience as GDP growth surpassed analyst forecasts in the final quarter of 2025. Data indicates that household spending on private goods and services remains robust heading into January, supported by stable retail gasoline prices. Despite the positive economic momentum, analysts from ING suggest the Bank of Japan (BoJ) will likely maintain its current policy stance through April. The central bank is now anticipated to delay its next interest rate hike until June 2026 to ensure sustainable economic stability. This stronger-than-expected growth provides a solid foundation for eventual monetary tightening while minimizing immediate market volatility. Market participants expect these developments to support the Japanese Yen, though the Nikkei 225 may face headwinds from the prospect of higher borrowing costs.