Economist: Bank of Japan Most Likely to Hike Rates in July, Yen Depreciation May Force Early Action

By: theblockbeats.news|2026/03/30 05:49:13
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BlockBeats News, January 16th, Bloomberg's latest survey of 52 economists shows that exchange rate dynamics are becoming a key variable influencing the Bank of Japan's policy decisions. Against the backdrop of a continued weakening yen and upward inflationary pressure, the market is warming up to the expectation of the Bank of Japan's early rate hike.


The survey shows that all respondents unanimously expect the Bank of Japan to keep its benchmark interest rate at 0.75% unchanged at the policy meeting on January 22-23. As for the timing of the next rate hike, July has become the most mainstream expectation, with 48% economist support; the proportions believing in a rate hike in April or June are both 17%.


Economists generally expect that the Bank of Japan's future rate hike pace will be maintained at once every six months. However, if the yen continues to depreciate and pushes up inflation expectations, the central bank may be forced to act more quickly. Junju Iwahashi, an economist at Sumitomo Mitsui Trust Bank, pointed out that if the dollar falls below the 160 level against the yen, the rate hike timetable could be significantly accelerated.


Currently, the yen exchange rate is hovering around 158.5, close to the multi-decade low set in July 2024. In the survey, three-quarters of respondents believe that the risk of yen weakness forcing the Bank of Japan to hike rates early is rising.


In terms of the rate path, economists' median forecast for the "terminal rate" of this rate hike cycle has been raised to 1.5%, the highest level since this survey began tracking in late 2023. Additionally, most respondents believe that the key focus of the meeting next week will be the Bank of Japan's updated quarterly economic outlook report, which for the first time incorporates the economic stimulus plan introduced by the administration of Prime Minister Hidetoshi Akishichi, potentially signaling the pace of future rate hikes.

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