The Bank of Japan is highly likely to raise interest rates this quarter; whether it will act in April or June remains a matter of debate.

Mars Finance News, on April 16, according to a Reuters survey of nearly two-thirds of economists’ forecasts, the Bank of Japan will raise its benchmark interest rate to 1% by the end of June. Under the uncertainty brought by the Iran war, the market considers the possibility of a rate hike this month or in June to be roughly equal. Economists still generally expect the Bank of Japan to tighten policy again this quarter, a view that has remained largely unchanged since the U.S.-Iran conflict began on February 28. If there is any impact, it is that this conflict has intensified market concerns over rising energy prices, renewed inflation pressures, and further weakening of the yen, thereby reinforcing hawkish rate hike expectations.

In a survey conducted from April 7 to 14, out of 71 economists, 46 (65%) predicted that the policy rate would rise to 1% before the end of June, up from 60% in March and 58% in February. Among the 40 economists who explicitly provided timing judgments, 38% chose April, and 35% chose June. In last month’s survey, the highest support for a June rate hike was 32%, followed by 30% for July, and 27% for April.

Regarding after June, the median forecast indicates that the Bank of Japan will raise borrowing costs to 1.25% in the fourth quarter, slightly earlier than previous expectations. The median forecast also shows that the Bank of Japan will raise rates by 25 basis points to 1.50% in the third quarter of 2027, after which rates will remain until the end of the year, although some institutions expect it to rise to 1.75%. (Jin10)