The Bank of Japan (BOJ) is expected to predict inflation will remain around its 2% target for the next three years, indicating it is prepared to hike interest rates from near-zero levels this year.

Governor Kazuo Ueda will emphasize the BOJ’s cautious approach and use data-dependent decision-making when determining the next rate hike.

The BOJ is likely to maintain its short-term interest goal in a range of 0-0.1%, having made a historic withdrawal from its drastic stimulus just last month.

The board is not anticipated to alter its intentions to purchase government bonds at the current rate of about 6 trillion yen ($38.8 billion) per month.

The BOJ anticipates that inflation in fiscal 2026 will remain at about 2%, and inflation will reach 1.9% in both fiscal years 2024 and 2025.

The market is searching for signals on the timing of the BOJ’s next rate hike, with many economists predicting it will occur in the third or fourth quarter.