BOJ seen pausing rate increases as oil costs may lift inflation outlook
Four sources expect only a small adjustment to the fiscal 2027 inflation forecast, while another interest-rate increase remains possible in December.
BOJ expected to lift rates to 1.50% in December, economist poll shows
The share of respondents expecting rates to reach 2.00% or more increased to 51%, compared with 40% in September.
A majority of economists surveyed October 13-19 expect the Bank of Japan to raise interest rates in December, maintaining a quarterly schedule after increases in June and September. Nearly 70%, or 54 of 78 respondents, forecast a policy rate of 1.5% this quarter.
That proportion was almost twice the previous survey's share. Among 54 economists giving a specific month for the next increase, about 80% picked December. Just 2% selected the policy meeting that ends October 30.
Kazutaka Maeda, senior economist at Meiji Yasuda Research Institute, said waiting until the new year could increase yen selling if U.S. and European rates rise before year-end. Takeshi Minami, chief economist at Norinchukin Research Institute, said neither economic overheating nor price developments justified back-to-back increases.
For the period through end-June, 60% of analysts, or 39 of 65, forecast a policy rate of 1.75%. Almost half of the 41 respondents to a separate question identified 1.75% as the terminal rate. The share expecting rates to reach 2.00% or higher rose from 40% in September and 36% in August to 51%.
The survey also highlighted concerns about opposition within the BOJ. Of 32 respondents, 23 said dissenting votes at the next rate increase could put pressure on the yen. Two board members nominated by Prime Minister Sanae Takaichi opposed September's increase to 1.25%.
On government borrowing, 15 of 23 economists expected new bond issuance below 40 trillion yen. Takaichi has set a target of around 40 trillion yen for the fiscal 2027 budget.