Economists in a new Bloomberg poll overwhelmingly circled December for the Bank of Japan's next increase, while not a single one penciled in action at the Oct. 30 decision. Specifically, 83% look for a hike at the meeting ending Dec. 18 from the current 1.25%.
That marks a sharp pivot from last month, when only 35% favored December and January was the leading choice for the next step. The latest results also show 67% now anticipate moves roughly every quarter, up from 46% previously.
That quarterly cadence lines up with recent momentum: the BOJ lifted rates in September, its second move within three months, the briskest stretch since 1990.
In his survey reply, Keiji Kanda, who is Daiwa Institute of Research's chief economist, said, "If it does, the challenge going forward will be to adjust the degree of monetary accommodation with a view to firmly anchoring inflation at 2%." He anticipates increases coming in December and March. The median forecast for the so-called terminal rate held at 1.75%.
About a month ago, the board led by Governor Kazuo Ueda lifted borrowing costs to 1.25%, moving policy into what the BOJ estimates is a neutral band of 1.1% to 2.5% for the first time. That shift sharpened attention on where this tightening phase could top out.
Some economists see potential friction from Prime Minister Sanae Takaichi's government. Takaichi is known as favoring easy policy to support growth, while, in recent comments, US Treasury Secretary Scott Bessent called on Japan to abandon reflationary strategies. After those remarks, Takaichi and her ministers said they are not pursuing reflation, and about two thirds of surveyed economists concluded the government had eased its posture toward BOJ rate increases.
When central bank calls affect planning, a quick daily read helps, so sign up for the free Market Briefs newsletter today
Naomi Muguruma, the lead bonds strategist at Mitsubishi UFJ Morgan Stanley Securities, said, "The prime minister's office probably doesn't really welcome further BOJ rate hikes." She continued, "Still, it appears likely it will stand by and tacitly accept them for the time being, mainly because of relations with the US."
September's hike drew dissent from Toichiro Asada and Ayano Sato, both chosen by Takaichi, a split that contributed to a weaker yen and kept vote counts in focus. Meanwhile, Yoshimasa Maruyama, SMBC Nikko Securities' chief market economist, sees a chance that Hajime Takata, viewed as hawkish, could push for back-to-back hikes at this meeting.
BOJ watchers expect the quarterly outlook released with the October decision to leave inflation projections broadly intact, with a small upward nudge for next fiscal year. According to Takeshi Yamaguchi, the head economist at Morgan Stanley MUFG Securities, "The BOJ is likely to indicate that it sees underlying inflation as having reached around 2%." He added, "We expect the bank to leave policy unchanged this month, but it is likely to be a hawkish hold."
The bottom line: survey expectations lean to a December move, a quarterly pace thereafter, and a 1.75% endpoint for rates. That path would keep Japan's yields grinding higher, with politics and board votes as the swing factors to watch.
Markets run on expectations, so get the free Market Briefs in your inbox for a quick daily catch-up
