According to a Reuters poll, around 70% of 78 economists expect the BOJ to raise its policy rate to 1.50% in December. The view is that quarterly tightening will continue next year.
According to the latest Reuters poll, 54 of 78 economists, or around 70%, expect the BOJ to raise rates to 1.5% this quarter. The results indicate that the quarterly pace of tightening seen in June and September will continue. The proportion has nearly doubled from the previous survey.
Factors supporting a December rate hike include accumulating inflationary pressures and higher energy and import costs resulting from yen weakness and the situation in the Middle East, while a calmer yen market and previous intervention measures are seen as conditions supporting a rate hike.
BOJ board member Junko Koeda (小枝 淳子) said the central bank should not become excessively cautious in light of inflation risks, which the market interpreted as a signal supporting continued tightening. Chief economist Takeshi Minami (南 武志), however, said the economy was not overheating to the extent that it required consecutive rate hikes and emphasized the importance of assessing further data.
Looking ahead to next year, 39 of 65 respondents, or around 60%, expect the policy rate to rise to 1.75% by the end of June, while the proportion expecting the terminal rate to reach 2.00% or higher has risen to 51%. On the fiscal front, many economists expect new government bond issuance to fall below ¥40 trillion, although fiscal policy could affect the market.
As potential trading factors and impacts, a BOJ rate hike in December would mark consecutive quarterly rate hikes and could ease downward pressure on the yen. However, another dissenting vote at the next policy meeting could weigh negatively on the market as political intervention. On the fiscal front, curbing new government bond issuance could help mitigate upward pressure on yields.