In a Reuters survey conducted Feb. 10-18, a majority of economists said they expect the Bank of Japan to raise its key policy rate to 1% by the end of June, and some respondents believe the central bank could move even earlier, possibly in April. The poll, the first taken after Prime Minister Sanae Takaichi's landslide election win on Feb. 8, showed the consensus for the next rate increase has shifted forward from an earlier view that it would occur in late September.
In December the BOJ raised its policy rate to 0.75%, a 30-year high, and indicated it was prepared to continue tightening. Many global central banks are near the end of rate-cutting cycles, and market participants are watching closely to see whether Takaichi will press again for lower interest rates.
Survey findings
All 76 economists polled said the BOJ would keep rates unchanged at its March policy meeting. Beyond March, the survey revealed a marked tilt toward earlier action. Of the economists responding, 58% - or 43 of 74 - expected the policy rate to reach 1% by the end of June, a rise from just over one-third who held that view in January.
When asked to specify a month for the next hike, 44 economists provided a response. June was the most commonly chosen month at 36%, while 20% picked April and another 34% selected July.
"The BOJ is in a hawkish mood and it’s possible that the next rate hike will come as soon as April," said Marcel Thieliant, head of Asia-Pacific at Capital Economics, while adding that June remains the more likely timing.
Kento Minami, senior economist at Daiwa Securities, said the BOJ was likely to move at a relatively brisk clip with further rate rises, mindful of upside inflation risks arising from expansionary fiscal measures and the yen's depreciation.
Currency moves and fiscal debate
The yen, which slid close to the psychologically important 160 per U.S. dollar in January, strengthened by nearly 3% in the most recent week covered by the poll - its largest weekly rise since November 2024. That rebound was partly attributed to speculation that Takaichi's victory could boost her position in resisting steeper tax cuts and broader spending measures advocated by opposition parties.
Nonetheless, economists remain cautious about the fiscal stance implied by the new prime minister's agenda. In an additional question posed in the poll, over 57% of those who responded - 19 of 33 economists - said they were "highly" or "somewhat" concerned that a proposed two-year suspension of the consumption tax on food and beverages would place strain on public finances.
"Fully ending the consumption tax reduction after two years would be difficult, leaving fiscal risks," said Atsushi Takeda, chief economist at Itochu Research Institute.
Expectations on intervention and wages
To counter further yen weakness, two-thirds of respondents to a separate question - 20 of 29 - said they expected authorities to intervene again in currency markets. Among those who anticipated intervention, 40% cited the 160 yen per dollar level as the most likely trigger for action.
Respondents were also asked about wage negotiations. Approximately 52% - 16 of 31 economists - said they did not expect this year’s negotiated pay increases to exceed last year’s 5.25%. That share was down from 68% in December and 81% in November. The median of 29 economists who provided a numerical view on wages put expected growth at 5.2%, up from 5.0% in December and 4.9% in November.
Implications and market focus
The poll results point to a pronounced shift in expectations for BOJ policy timing following the election outcome and recent currency moves. Market participants will be watching BOJ communications, fiscal policy developments and yen movements for signals on the pace and scale of any further tightening.