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Economists in Reuters poll expect another BoJ rate hike by December

In the poll, 86% of economists forecast the BoJ’s key rate will reach 1.25% by Q4, and 79% said USD/JPY near 160 is too weak versus Japan’s fundamentals.

Reported · Written up by our desk · Central Banks

A majority of economists surveyed in a Reuters poll expect the Bank of Japan to raise its key interest rate again by the end of December, with some anticipating a move as soon as October. The economists also expect further rate increases to remain possible into next year, according to the poll.

The survey found 86% of economists expecting the BoJ to lift its key rate to 1.25% by Q4, slightly higher than 79% in an earlier June survey. Separately, 70% forecast a hike to at least 1.50% in Q2 of 2027, while 51% see 1.50% as the likely terminal rate.

Economists also flagged risks to Japan’s public finances from rising bond yields. In the poll, 58% said the impact of higher Japanese Government Bonds yields on Japan’s debt financing costs over the next two to three years is either “very” or “somewhat” concerning.

The poll also pointed to the yen outlook, with 79% saying USD/JPY around the 160 level is too weak relative to Japan’s economic fundamentals. Reuters survey respondents tied the debate to the BoJ’s shift away from ultra-loose policy after lifting rates in March 2024.

Latest closeUSD/JPY 162.90 ▲0.3%

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