BoJ to Hike Rates Amid Persistent Inflation Fears

A Reuters poll suggests that the Bank of Japan (BoJ) will raise interest rates to 1.25% at its September policy meeting, with a further hike expected in the second quarter of 2027. This move comes as the BoJ seeks to address persistent concerns over broadening price pressures and Japanese Yen weakness.

The poll found that 82% of economists believe that the joint US-Japan Yen-buying intervention has significantly lowered political barriers for rate hikes, with all but two of 68 respondents expecting a rate hike on September 18. Over one-third (24 out of 66) anticipate another increase to 1.50% in either October or December.

The majority of analysts polled (89%) see the policy rate reaching at least 1.50% by March next year, while around 62% expect it to reach at least 1.75% by the end of Q2 2027, three months earlier than predicted in August's poll.