The survey sees all 64 economists anticipating that the BOJ will keep its policy rate unchanged at 0.75% next week. Meanwhile, roughly 60% (37 out of 62 economists) see the Japanese central bank making a move to raise the policy rate to 1.00% by end-June. That is not too much changed from the ~58% in the February poll.
Of the 44 economists who specified a timeline for the next rate hike, June was the top pick at ~32%. July got ~30% of the vote and ~27% stuck to April for the next move by the BOJ.
As things stand, market pricing does concur with what we’re seeing for the above somewhat. However, it does at least follow for what to expect for next week. Traders are pricing in ~94% odds of no change to the policy rate on 19 March with odds of a move in April at around ~48%. That then rises to nearly 80% for a move in June instead.
The survey median forecasts also show that the BOJ is to raise interest rates to 1.25% by Q1 2027 and then 1.50% by Q1 2028.
At the balance, it seems that most economists don’t see Takaichi’s plant of two new BOJ board members as being impediments to further policy tightening. But from the survey response, it seems that it is a bit of a close call but definitely not disheartening at least.
18 of 31 economists say that the appointments of Toichiro Asada and Ayano Sato would not hinder the delivery of future rate hikes. Mizuho Securities notes that:
“Since the share of ‘reflationists’ among the nine board members is not high, their voting behaviour and other actions are likely to have only a limited direct impact on policy decisions.”
It’s a fair take but we will only get a better idea once they come in and how that might influence other members on the board.
