"BOJ Rate Hike in December" Expert Forecasts Jump 48 Percentage Points in a Month

83% of Experts: "Another Rate Hike in December"
Whether Inflation Reaches 2% Is Key

The number of experts who agree with the view that the Bank of Japan (BOJ) will raise its key interest rate at its final monetary policy meeting of the year has risen sharply, according to a survey. The outlook is that the BOJ will have little choice but to act in response to rising inflationary pressure.

According to a survey of economists released by Bloomberg on October 22, 83% of respondents expected the BOJ to raise its short-term policy rate, its benchmark interest rate, at its monetary policy meeting in December. The prevailing view is that the BOJ will make another increase of 0.25 percentage points at year-end, after raising the rate last month to 1.25%, its highest level in 31 years.

Bank of Japan Governor Kazuo Ueda speaks at a press conference following the BOJ's monetary policy meeting in Tokyo, Japan, on the 18th of last month. Tokyo, Japan = Reuters-Yonhap.

Bloomberg reported that this was a sharp increase of 48 percentage points from 35% in last month's survey. However, not a single respondent expected the BOJ to raise rates at its meeting on October 29-30.

The share of respondents who expected the BOJ to raise rates once every three months also rose, from 46% last month to 67%. The BOJ raised rates in both June and September, halving the interval between increases from about six months. This would mark the fastest pace of monetary tightening since 1990.

Experts identified the BOJ's assessment of inflation as the key issue to watch at this month's monetary policy meeting. They said that if the BOJ determines that underlying inflation has reached its 2% target, the case for another rate increase this year could be strengthened.

Former BOJ board member Eiji Maeda said in an interview with Bloomberg yesterday, "For the next one or two increases, rates will probably be raised about once every three months." Specifically, he said the BOJ could set its policy rate at around 1.5% at its December meeting, then raise it to around 1.75% at its March or April meeting, when the outcome of next spring's wage negotiations, known as Shunto, becomes clear.

Bloomberg noted, however, that Prime Minister Sanae Takaichi's economic policies could be a variable. Takaichi has been supportive of monetary easing to stimulate the economy, but recently, following criticism of Japan's monetary easing policy by U.S. Treasury Secretary Scott Bessent, the government has publicly emphasized that it will not pursue policies designed to fuel inflation.

In the survey, two-thirds of respondents also said that "the Takaichi government has taken a step back from its previous opposition to rate hikes." Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said, "The prime minister's office will not welcome further rate hikes by the BOJ," but added that "considering relations with the United States and other factors, it is likely to tolerate them for the time being."

This content was produced with the assistance of AI translation services.