BoJ Expected to Raise Interest Rate in September Amid Shifting Market Sentiment

A Reuters poll has found that economists expect the Bank of Japan (BoJ) to raise its interest rate in September, reversing a sharp decline from July. According to the survey conducted between August 17-24, 57% of 58 respondents predicted an interest rate hike.

The majority of analysts, 35 out of 54, believe that the policy rate will reach at least 1.5% by end-March next year, three months earlier than projected in July's poll. Around 60% foresaw the rate reaching at least 1.75% by end-Q3 2027.

Interestingly, half of the respondents who answered an extra question said that 1.75% would be the terminal rate compared with just 19% last month. The share of those choosing '2% or above' rose to 36% from 23% in July.