A majority of economists surveyed by Reuters now predict that the Bank of Japan (BoJ) will hold interest rates steady through the end of 2025, postponing any further rate hikes until early 2026 due to lingering uncertainty over US tariff policies.
The June 2-10 Reuters poll of 60 economists revealed no expectations for a rate increase at the BoJ’s upcoming policy meeting scheduled for June 16-17. Instead, 52% of respondents—30 out of 58—forecast that borrowing costs will remain at the current 0.50% level by year-end, a notable shift from May when the same proportion anticipated rates rising to 0.75% by then.
Despite this, more than three-quarters of the economists surveyed expect at least one 25 basis point rate hike by the end of March 2026. Among the 35 economists who specified a month for the next increase, January 2025 was the leading choice at 37%, followed by 23% favoring October 2025 and 9% anticipating March 2025.
The BoJ has already started to normalize policy, exiting its massive stimulus program in March 2024 and raising short-term interest rates twice—in July 2024 to 0.25% and in January 2025 to 0.50%.
On monetary easing, over half of the economists surveyed (17 out of 31) expect the BoJ to slow the pace of tapering Japanese Government Bond (JGB) purchases beyond April next year, with the projected quarterly reduction ranging between 200 billion and 370 billion yen, down from the current 400 billion yen per quarter.
Regarding government debt issuance, 75% of respondents anticipate a reduction in the issuance of super-long JGBs, while 25% expect issuance levels to remain unchanged.
Market reaction to the poll was muted, with the USD/JPY pair trading modestly higher by 0.11% at 145.00 at the time of reporting, reflecting cautious investor sentiment amid evolving monetary policy outlooks.
The Reuters poll underscores growing caution among economists about the BoJ’s immediate rate hike prospects, citing US tariff uncertainties as a key risk factor delaying further tightening in Japan’s monetary policy.
