BOJ to raise rates to 1.50% in December, sticking to quarterly pace: Reuters poll

The Bank of Japan (BOJ) plans to raise interest rates to 1.50% in December, according to a Reuters poll of economists. This decision follows rate hikes in June and September, as the central bank maintains a quicker pace in its campaign, which began with just one rate increase per year. Inflation pressures are rising due to higher energy and import costs, a weaker yen, and the Middle East conflict.

Nearly 70% of economists in the October 13-19 survey expect the BOJ to increase its policy rate in December, while only 2% expect the increase to occur at the upcoming October 30 meeting. Despite concerns from some BOJ officials about the pace of rate hikes, the majority of analysts forecast that the policy rate will reach 1.75% by June and possibly 2.00% or more in the future.

The yen has strengthened to about 4% above its 2026 low, raising concerns about the BOJ's ability to continue tightening policy. Japanese government bond yields have risen alongside global market volatility, partly due to expectations of additional BOJ rate hikes and concerns over the government's fiscal spending plans under Prime Minister Sanae Takaichi.