BOJ Watch: Bank of Japan sources say a June rate hike to 1% from 0.75% is likely unless the Middle East conflict sharply worsens, as fuel-driven inflation pressure keeps building. Japan Politics & Demographics: Prime Minister Sanae Takaichi called Japan’s record-low births and fertility rate an “extremely severe” “quiet emergency,” while the government’s extra budget bill cleared a key Lower House committee step. Extra Budget: Japan’s fiscal 2026 supplementary budget (3.1135 trillion yen) is set to fund Middle East fallout measures, with Middle East tension risks still shaping domestic policy. Energy & Industry: Separate coverage highlights Japan’s broader energy squeeze and the push to manage costs amid regional instability. Regional Security Diplomacy: South Korea’s unification minister floated four-way peace talks (two Koreas, U.S., China) and suggested expanding to include Japan over time. Maritime Strategy: Japan-Philippines EEZ talks are framed as a response to China’s pressure, with Taiwan closely monitoring. Immigration Reform: Japan signed a Thailand memorandum to implement a new foreign worker skill development program starting April 2027, replacing the criticized technical intern system. Tech & Trade: Nissan is considering making Chery vehicles in the UK, underscoring how Japanese firms are adapting to China-driven competition in Europe. Disaster Readiness: Japan’s new five-level heavy-rain and flood warning system is highlighted as Tokyo braces for the rainy season after Typhoon Jangmi.