A majority of economists in a Reuters poll expect the Bank of Japan to raise rates to 1.50% in December. More forecasters expect at least two further increases to 2.0% by the middle of next year. The yen's recent stability supports the case, though dissenting votes could weigh on the currency.
The Bank of Japan will raise interest rates to 1.50% in December, according to a majority of economists in a Reuters poll. The move would follow increases in June and September and keep up a quicker pace in a campaign that started with just one rate rise a year.
Poll points to December
Nearly 70% of economists, 54 of 78, in the October 13-19 survey expected the BOJ to raise its policy rate to 1.5% this quarter. That is almost double the share in the previous poll. Of the 54 respondents who specified a month, about 80% chose December, while only 2% chose the policy meeting that concludes on October 30.
Rising energy and import costs, worsened by a weak yen and the war in the Middle East, are adding to inflation pressure in Japan. Separately, there are more forecasters expecting at least two more rate rises to 2.0% by the middle of next year. A period of relative stability in the yen, which spent most of the year under selling pressure, also supports a December increase.
Yen risk and political friction
Kazutaka Maeda, senior economist at Meiji Yasuda Research Institute, warned of "a risk that yen selling could accelerate" if the BOJ postpones its move until the new year.
Nearly three-quarters of respondents, or 23 of 32, said further dissenting votes at the next rate hike could weigh on the yen. The currency is only about 4% stronger than its 2026 low of around 164 per dollar.
In September, two board members nominated by Prime Minister Sanae Takaichi opposed the decision to raise rates to 1.25%. Traders saw the dissent as a sign the BOJ's rate-hike plans could continue to face opposition from Takaichi's administration, briefly pushing the yen lower.
What the BOJ is weighing
The BOJ is unlikely to raise rates this month, while the US Federal Reserve and the European Central Bank are expected to raise borrowing costs in December, separate Reuters polls found. Sources have told Reuters many BOJ officials prefer to assess more data on how previous increases have affected financial conditions.
Source: Investing.com (Reuters)
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