The Bank of Japan Likely to Hike Rates This Quarter, April or June Move Still Debated

BlockBeats News, April 16th - According to a Reuters survey, nearly two-thirds of economists expect the Bank of Japan to raise its benchmark interest rate to 1% by the end of June. Amid the uncertainty caused by the Iran conflict, the market sees the possibility of a rate hike this month or in June as roughly equal.

Economists still generally expect the Bank of Japan to further tighten its policy this quarter, a view that has remained largely unchanged since the US launched a war against Iran on February 28th. If anything, this conflict has heightened market concerns about rising energy prices, resurfacing inflationary pressures, and further weakening of the yen, thereby reinforcing hawkish rate hike expectations.

In a survey conducted from April 7th to 14th, out of 71 economists, 46 (65%) predicted that the policy rate would rise to 1% by the end of June, up from 60% in the March survey and 58% in February. Among the 40 economists who gave a specific timing prediction, 38% chose April and 35% chose June. In last month's survey, the highest percentage supporting a rate hike in June was 32%, followed by 30% in July, and 27% in April.

Regarding the period after June, the median forecast indicates that the Bank of Japan will raise the borrowing cost to 1.25% in the fourth quarter, slightly earlier than previously expected. The median forecast also shows that the Bank of Japan will hike rates by another 25 basis points to 1.50% in the third quarter of 2027, with rates held until the end of the year. However, a few institutions also predict a hike to 1.75%. (Kinjun)