The Bank of Japan (BOJ) is expected to raise interest rates once more this year, likely in the third quarter, bringing the benchmark rate to 0.75%, according to a Reuters poll of economists published Thursday.
A majority of over 65% of respondents (38 out of 58) foresee a rate hike in July or September, while a smaller subset of 39 analysts forecasting a specific month saw
- 59% picking July,
- 15% choosing June,
- and a handful selecting April or September.
The BOJ’s current rate stands at 0.50%, following a January increase from 0.25%—the highest level since the 2008 financial crisis.
The survey, conducted between February 12 and 18, also indicated that the central bank is widely expected to keep rates unchanged at its March 18-19 policy meeting, with all 61 economists polled forecasting no change.
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One of the key factors influencing the BOJ’s policy decisions is wage growth. The poll showed that the median forecast for wage increases in this year’s labor talks is 5.0%, up from 4.75% in January—marking the first time the poll median has hit that level.
Analysts say that strong wage growth is critical for the BOJ to justify further tightening. “It will be necessary for the BOJ to confirm the extent of wage increases, particularly among small and medium-sized enterprises, as well as assess the impact of the January rate hike,” said Junki Iwahashi, senior economist at Sumitomo Mitsui Trust Bank.
The rise in wages reflects ongoing labor shortages and persistent inflation pressures, noted Kyohei Morita, chief economist at Nomura Securities, though he also cautioned that some smaller firms may struggle to sustain pay hikes without profitability improvements.
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Looking further ahead, the median forecast for the BOJ’s terminal interest rate remains at 1.00%, unchanged from a November poll, with estimates ranging between 0.75% and 2.00%. The median forecast for the end of March 2026 also stands at 1.00%.
Some analysts see July as the most likely timing for a rate hike, as it allows for a six-month gap after the January decision and follows the Upper House election, said Masato Koike, senior economist at Sompo Institute Plus.
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Next decision is due on March 19