Poll shows 75 of 87 economists expect Bank of Japan to raise rates to 1.25% amid weak JPY and inflation concerns.
A majority of economists surveyed predict the Bank of Japan will raise interest rates by 25 bps to 1.25% by the end of December. The poll, conducted in July, reflects expectations shaped by recent geopolitical developments and a weakening Japanese yen.
Of 87 economists, 83 expect no change in rates this quarter, while 75 anticipate a hike by year-end. Among those, 27 of 51 foresee a December move, and 18 expect an October adjustment. Most respondents believe USD/JPY at 160 is undervalued relative to Japan’s economic fundamentals.
The weak yen is seen as a potential inflation driver, prompting speculation the BOJ may act sooner to curb price pressures. Market pricing aligns with expectations of a 25 bps hike by year-end, though timing remains uncertain.