BOJ to speed up its tightening campaign, raise key rate to 1.25% in September: Reuters poll

The Bank of Japan (BOJ) is set to raise interest rates more rapidly than previously anticipated, with a majority of economists predicting a September hike to 1.25%, according to a Reuters poll. This decision comes as the central bank becomes increasingly concerned about inflation fueled by the U.S.-Israeli conflict with Iran, as well as persistent pressure on the Japanese yen.

Although Japan and the U.S. recently intervened in the yen market, more than two-thirds of respondents believe this action was ineffective. The BOJ is also expected to raise rates further to at least 1.75% by the end of Q3 2027, according to 60% of polled economists. Analysts now foresee the policy rate reaching at least 1.5% by the end of March 2024, three months earlier than in July's poll.