BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected: Reuters poll

The Bank of Japan (BOJ) is set to raise interest rates to 1.25% on September 18, with a further increase to 1.75% anticipated in the second quarter of 2027, according to a Reuters poll. This decision marks an earlier rate hike than previously anticipated, driven by concerns over widening price pressures and a weakening yen. A significant factor contributing to this shift is the U.S.-Japan yen-buying intervention and remarks by Treasury Secretary Scott Bessent, who expressed strong support for decisive monetary steps to combat yen weakness during a meeting with BOJ Governor Kazuo Ueda.

Despite this, the BOJ's ability to adjust monetary policy independently may be limited due to the Japanese government's accommodative fiscal stance. Economists now expect the policy rate to reach at least 1.75% by the end of Q2 2027, three months ahead of the August poll prediction.