A Reuters poll revealed that 57% of economists surveyed believe the Bank of Japan will raise interest rates again by the end of the year, with many forecasting this change for December.
The data indicates that experts are confident the Bank of Japan is moving away from years of ultra-loose monetary policy, even as other central banks, such as the U.S. Federal Reserve, are leaning toward rate cuts.
The Reuters poll, conducted among 54 economists from August 13 to 19, found that 31 support a rate hike by the end of the year, expecting an increase of 25 basis points to 0.50%.
Among the 22 economists who specified a month for the potential hike, around 14 predicted December, while eight suggested October.
Atsushi Takeda, Economic Research Institute Chief Economist at ITOCHU, stated that the current policy remains very loose and that the Bank of Japan is expected to continue raising rates to a neutral level until inflation hits its 2% target.
In July, the central bank caught the market off guard by increasing its benchmark interest rate to 0.25%, just four months after moving away from negative rates. The BOJ Governor, Kazuo Ueda, then indicated plans for further rate hikes in the future.
This announcement coincided with significant market fluctuations, including a stronger yen and a decline in the Tokyo stock market. While markets later stabilized, BOJ Deputy Governor Shinichi Uchida sought to reassure investors by emphasizing that the bank would avoid raising rates during periods of market instability. Despite this, analysts believe the bank’s overall stance remains consistent.
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