A Reuters poll indicates that the Bank of Japan (BoJ) is expected to raise its interest rates to 1.25% at its September policy meeting, with a further increase to 1.75% projected for the second quarter of 2027. This anticipated tightening comes earlier than previously expected, driven by ongoing concerns over broadening price pressures and the persistent weakness of the Japanese Yen (JPY) [1].
The survey, conducted from September 1-8, revealed that all but two of 68 economists foresee a rate hike on September 18, a notable increase from 57% in the previous poll. Additionally, more than one-third of respondents (24 out of 66 economists) anticipate another rate hike to 1.50% in either October or December, which is roughly double the share from August [1].
Looking further ahead, 89% of analysts (57 out of 64) expect the policy rate to reach at least 1.50% by the end of March next year, up from 65% in the prior month. Around 62% of respondents see the interest rate reaching at least 1.75% by the end of Q2 2027, which is three months earlier than predicted in the August poll [1].
The poll also highlighted that 82% of economists believe the joint US-Japan Yen-buying intervention and comments by Treasury Secretary Scott Bessent on BoJ policy have 'significantly' or 'somewhat' lowered political barriers for rate hikes [1]. At the time of reporting, the USD/JPY pair was up 0.05% on the day at 153.60, reflecting a modest market reaction [1].
CONCLUSION
The Reuters poll signals strong expectations for imminent and continued rate hikes by the Bank of Japan, largely in response to Yen weakness and inflation concerns. Market participants appear to be pricing in these moves, as reflected in the modest uptick in USD/JPY. The lowered political barriers and broad analyst consensus suggest a high likelihood of policy tightening in the near term.