A majority of economists surveyed in a recent Reuters poll expect the Bank of Japan (BOJ) to raise its key interest rate in June, with further increases anticipated by the end of the year. The poll’s consensus forecast suggests economists believe the central bank is increasingly focused on inflation risks over potential downside risks to the economy.
The survey, published in early June, indicated a majority expectation among participating economists for the BOJ to raise its short-term policy rate at its upcoming meeting. The poll results showed a median forecast for the rate to reach 1.0% in June and 1.25% by the conclusion of 2024. The Bank of Japan’s current uncollateralized overnight call rate is set in a range of 0% to 0.1%.
This forecast from economists follows the central bank’s significant policy shift in March 2024, when it ended its long-standing negative interest rate policy. That decision marked the first interest rate hike in Japan in 17 years and concluded an era of unconventional monetary easing measures aimed at combating deflation.
According to the report from Reuters, the economists’ projections reflect a view that persistent inflation and a weakening yen are putting pressure on the central bank to continue normalizing its monetary policy. The yen’s depreciation against other major currencies increases the cost of imported goods, which can contribute to domestic inflation.
BOJ officials, including Governor Kazuo Ueda, have not publicly committed to a specific timeline for future rate adjustments. In public statements, Ueda has affirmed the bank will guide policy based on underlying inflation trends, wage growth, and overall economic conditions. The bank has consistently stated it will proceed cautiously in adjusting its policy framework.
The Reuters poll represents the expectations of an external group of economists and does not reflect an official position or forecast from the Bank of Japan itself. Financial markets and analysts will be closely watching the outcome of the BOJ’s next two-day policy meeting, scheduled to conclude on June 14, for any official signals regarding the future path of interest rates.
 will raise its interest rate in June, aiming for 1.0%. Further increases are expected by late 2024, reaching 1.25%, amidst inflation and yen weakness.){kind=link}