Boj Is Likely To Hike Rates

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Boj Is Likely To Hike Rates

Boj Is Likely To Hike Rates In Q4

The majority of economists are of the view that the Bank of Japan is expected to raise the interest rate in Q4. In fact, around 96% of the economists had this view, which means we can now expect an increase of 25 bps.

Although Japan's prime minister is dovish, that would not be enough to stop the BoJ from raising the rates. If we look back, only 60% of the economists were forecasting a rate hike. But now, that has gone up to 96% which means the interest rate in Japan will now reach 0.75%.

Interest Rate Will Jump To 0.75%

small group of economists believes that the next rate hike will not happen in Q4 but during January 2026. So, even if we consider that possibility, it still shows that rate hikes are coming.

According to experts, there is a great deal of uncertainty over the global economy and even the domestic politics. So, the BoJ can't afford to delay the rate hikes.

In fact, delaying the rate hike could give an opportunity for inflation to start moving higher. Also, the Japanese Yen is depreciating, which is another reason for the BoJ to act fast. Meanwhile, the financial markets believe there's only a 40% chance that we will get a rate hike by the end of 2025.

Japan's PM has also recently pledged to increase government spending. This will be done in the energy sector in an attempt to boost the economy.

For now, it remains to be seen whether the policies of Japan's new PM will have a good effect on the economy or not. But some economists are concerned that the PM's policies are not sustainable.

One reason for the expansionary fiscal policies is due to the domestic politics in Japan. The ruling party is on the verge of losing the majority, and now they are trying to counter that with these policies.

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