For the BOJ to raise rates by the end of March, most analysts favor a January hike.
by Satoshi Sugiyama
TOKYO (Reuters) – The Bank of Japan will raise interest rates again to 0.50% at one of its two meetings this quarter, according to a poll of economists polled by Reuters, most of whom were leaning toward a January move.
The findings signal the BOJ’s determination to take further steps towards normal monetary policy after years of radical easing.
In a poll released on Thursday, January 8-15, all but two economists, 59 out of 61, said the BOJ would raise borrowing costs to 0.50% by the end of March.
Of the 32 who expect a hike this quarter and which month, less than two-thirds, 20, said at the January 23-24 meeting, the rest are in March.
Since policymakers held rates in December, analysts have been anticipating when the BOJ will raise rates again amid uncertainty over domestic wages and economic plans from U.S. President Donald Trump, who returns to the White House on January 20.
BOJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino said earlier this week that the central bank will debate raising rates at its next meeting.
Strong domestic wage growth and new inflationary pressures will support the case for a January hike, said Ayako Fujita, chief Japan economist at JPMorgan Securities.
“Delaying the interest rate hike until March, unless the upcoming inauguration of US President Trump causes major market turmoil, is considered to overstate the risk of market volatility,” Fujita said.
The BOJ said last week that wage increases were being rolled out to companies of all sizes and sectors, adding that conditions for a recent hike continued to fall in place.
In the year After ending negative interest rates in March 2024, the central bank last raised its short-term policy target to 0.25 percent in July. He signaled he was ready to hike again if wages and prices moved as planned, raising confidence that Japan would hit 2% inflation on a sustained basis.
All but one of the 22 economists who responded to an additional question said inflation in Japan could be higher than expected this year.
Harumi Taguchi, chief economist at S&P Global, said: “Inflation is more likely to weaken for a longer period than expected.” Market intelligence.
Also, the average of 23 economists who polled on the rate of wage increases in this year’s spring labor-management negotiations was 4.75%, up slightly from 4.70% in a poll last month. It is lower than last year’s 5.1 percent but higher than last year’s 3.58 percent.
