The Bank of Japan (BOJ) is increasingly pressured to adjust its monetary policy as surging oil prices, driven by the ongoing conflict in Iran, threaten to elevate inflation levels. During the April policy meeting, several board members expressed support for raising interest rates soon, with discussions indicating a potential hike as early as the June 15–16 meeting. Currently, the BOJ maintains its short-term policy rate at 0.75%, but the internal debates highlight significant concerns regarding inflation risks, particularly as Japan relies heavily on imported energy. Policymakers noted that the Iran conflict could intensify inflationary pressures, potentially pushing consumer prices higher across the economy. The hawkish tone from the BOJ has led to rising yields on Japanese government bonds, with the benchmark 10-year yield reaching its highest level in nearly three decades. Despite the inflation concerns, rising energy costs are simultaneously impacting household spending and business activity, complicating the BOJ's decision-making process. As inflation risks grow due to geopolitical tensions, investors anticipate a pivotal shift away from Japan's long-standing era of ultra-low interest rates.