Most economists forecast that the Bank of Japan (BOJ) will increase short-term interest rates later this year, according to a monthly survey conducted by the Japan Center for Economic Research (JCER), published Thursday.
The survey, which polled 36 economists between January 30 and February 6, revealed that 30 respondents expect the BOJ to maintain its interest rate at 0.5% during the first half of 2025, while the remaining six predict a hike to 0.75% during the same period.
Looking ahead to the second half of the year, 28 economists anticipate the BOJ will raise rates to 0.75%. Two of the respondents expect rates to remain unchanged at 0.5%, while six project an increase to 1%.
The outlook largely mirrors findings from the previous survey, conducted between December 23 and January 8, indicating that market expectations for the timing of the next rate hike have remained stable over the past month.
The survey also included projections on wage increases, with economists predicting an average wage hike of 4.92% for Japanese companies in this year’s union negotiations. This figure is lower than the 5.33% increase seen last year but higher than the 4.74% forecast in the previous month’s survey.
The BOJ raised its interest rate to 0.5% from 0.25% at its policy meeting in late January, citing Japan’s progress towards achieving its 2% inflation target. Governor Kazuo Ueda has indicated that the central bank is prepared to raise rates further if sustained wage growth continues to support inflation moving towards the 2% target in the long term.
Ueda has also noted that the current rate of 0.5% remains below levels considered neutral for the economy. BOJ estimates suggest the nominal neutral rate lies between 1.0% and 2.5%, although Ueda has refrained from pinpointing a precise figure.
A separate report by JCER’s lead economist, Ikuko Samikawa, published on January 24, estimated Japan’s neutral rate to range from 1.2% to 2.8%, and suggested that the BOJ is likely to raise rates to at least 1% in the near future.
Related topic:
Singapore to Establish New Entity for National Payment Systems Governance
Trump Pushes for Reciprocal Tariffs in Bold Shift of U.S. Trade Policy
