Bank of Japan rate seen rising to 1.5% in December, Reuters poll finds
Most economists surveyed by Reuters expect a December increase from the Bank of Japan’s current 1.25% rate guideline, with few choosing its October meeting.
The Bank of Japan is expected to raise its policy rate to 1.5% in December, according to a Reuters poll of economists conducted October 13–19. The forecast points to another increase from the bank’s current guideline of around 1.25%, as Japan faces pressure from energy and import costs.
Of 78 economists surveyed, 54 expected an increase to 1.5% this quarter. Among 54 respondents who specified a month, about 80% chose December. Only 2% chose the bank’s next policy meeting, scheduled for October 29–30, Reuters reported. The bank has not announced a December rate decision.
Why economists favour a December rate rise
Reuters linked the case for a further increase to rising energy and import costs, a weak yen and inflation pressure. A period of relative stability in the yen, after heavy selling pressure earlier in the year, also supports the case for December, the report said. Reuters reported that many Bank of Japan officials favour assessing more data on how earlier rate increases have affected financial conditions before acting again.
Bank of Japan board member Junko Koeda said last week that the bank should not become overly cautious about raising rates, Reuters reported, citing significant upside risks to inflation. Her warning followed rate increases in June and September. At the September decision to lift the rate to 1.25%, two board members nominated by Prime Minister Sanae Takaichi opposed the move.
How far economists expect rates to rise
Looking beyond December, 39 of 65 analysts in the Reuters poll expected the policy rate to reach 1.75% by the end of June 2027. The median forecast for that point was unchanged from the September poll, even as the share of economists expecting an increase this quarter had nearly doubled from the previous survey.
Views on a higher endpoint have shifted. Among respondents to an additional question, the share expecting rates to reach at least 2% rose to 51%, from 40% in September and 36% in August. Almost half of the 41 respondents to that question put the eventual rate at 1.75%, showing a split over how far this series of increases may go.
The October 29–30 meeting is the bank’s next scheduled opportunity to set policy. Its published guideline calls for the uncollateralized overnight call rate to remain around 1.25%. A December increase would require a further decision by policymakers after they assess incoming economic and financial data.
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Sources and context
- BOJ to raise rates to 1.50% in December, sticking to quarterly pace: Reuters pollCNA, republishing Reuters reporting
- Monetary Policy MeetingsBank of Japan
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.