Survey on what to expect from the Bank of Japan conducted by Reuters
In summary:
Rate Hike Expected in December: 56% of economists expect the Bank of Japan (BOJ) to raise interest rates at its December meeting, driven by yen depreciation and improving economic conditions.
Rate Projections:
- 90% of economists predict the BOJ will raise rates to 0.50% by the end of March 2025.
- The median terminal rate forecast is 1.00%, with estimates ranging between 0.50% and 2.50%.
Impact of Trump’s Presidency:
- 96% of economists believe Donald Trump’s return to the U.S. presidency will prompt the BOJ to hike rates further, as his policies are expected to stoke inflation globally.
Factors Driving BOJ Action:
- Sustained wage-driven inflation, yen depreciation, and rising import costs are pressuring the BOJ to act decisively to avoid falling behind.
- The weak yen, which has increased inflation by pushing up import costs, was a key factor behind the BOJ's earlier rate hikes.
BOJ Governor's Comments: Governor Kazuo Ueda emphasized the importance of addressing the yen's impact on economic and price stability and hinted at further rate hikes.
Economic Context:
- Japan's economy grew at an annualized rate of 0.9% last quarter, supported by improved consumption but weakened by sluggish capital spending.
- The BOJ ended negative rates in March and raised the policy rate to 0.25% in July, targeting durable 2% inflation.
