57% of Economists Expect Bank of Japan to Raise Rates in September

A growing majority of economists now expect the Bank of Japan to raise interest rates in September, with 57% forecasting a hike compared with just 5% in the previous survey. A narrow majority also expects the central bank’s policy rate to reach at least 1.50% by the first quarter of 2027, according to an update shared by @coinbureau on X.

The survey results indicate a significant change in expectations surrounding Japan’s monetary policy. Economists are also expressing concern about the impact of Prime Minister Takaichi’s fiscal policies on the yen, with 89% saying the policies are putting downward pressure on the Japanese currency.

Expectations for September Rate Hike Rise Sharply

The most notable change in the survey is the increase in expectations for a September rate hike by the Bank of Japan.

Only 5% of economists expected such a move in the prior survey. That figure has now risen to 57%, meaning expectations for tighter monetary policy have increased substantially.

The shift reflects changing views among economists about the direction of Japan’s interest-rate policy. The Bank of Japan has historically maintained an unusually accommodative monetary stance compared with other major central banks, although its policy direction has changed as economic and inflation conditions have evolved.

A rate increase would represent another step toward higher borrowing costs in Japan. The Bank of Japan’s decisions are closely watched by global financial markets because changes in Japanese interest rates can influence the yen, government bond yields and international capital flows.

The latest survey does not guarantee that the central bank will raise rates in September. Instead, it measures economists’ expectations regarding the likelihood of such a move.

Economists See Rates Reaching at Least 1.50%

The survey also points to expectations for significantly higher interest rates over the longer term.

A narrow majority of economists forecasts the Bank of Japan’s policy rate rising to at least 1.50% by the first quarter of 2027. According to the information shared in the update, that would represent the highest level since the 1990s.

The forecast is significant because Japan has spent decades operating with exceptionally low interest rates. The country’s monetary policy has therefore been closely monitored as policymakers gradually assess the appropriate level of borrowing costs.

A policy rate of at least 1.50% would mark a substantial change from the ultra-low-rate environment that has characterized much of Japan’s modern monetary history.

For businesses and consumers, higher interest rates can affect borrowing costs, while financial markets typically respond to expectations about the future path of monetary policy well before decisions are formally announced.

Fiscal Policy Raises Concerns for the Yen

The survey also highlights concerns about the relationship between Japan’s fiscal policy and the value of the yen.

According to the information shared by @coinbureau, 89% of economists say Prime Minister Takaichi’s fiscal policies are putting downward pressure on the yen.

The assessment comes as Japan faces the challenge of balancing fiscal policy with monetary policy. Government spending and other fiscal measures can influence economic activity and investor expectations, while interest-rate decisions by the central bank affect borrowing conditions and currency-markets dynamics.

The yen is particularly sensitive to expectations surrounding Japan’s interest rates because differences between Japanese and overseas borrowing costs can influence international investment decisions.

A weaker yen can affect Japan’s economy in several ways. It can increase the domestic cost of imported goods and energy while potentially benefiting exporters by making Japanese products more competitive overseas. The overall impact depends on the broader economic environment.

The 89% figure cited in the survey indicates that economists see fiscal policy as an important factor affecting the currency’s direction.

Bank of Japan Policy Faces Increased Market Attention

The combination of stronger expectations for a September rate hike, forecasts for rates to reach at least 1.50% by the first quarter of 2027 and concerns about fiscal policy places the Bank of Japan under increased market scrutiny.

The shift in expectations from 5% to 57% for a September hike represents the clearest change highlighted in the survey. Meanwhile, the longer-term forecast suggests that economists increasingly anticipate a period of higher Japanese interest rates.

For financial markets, the Bank of Japan’s policy path remains important well beyond Japan. Changes in Japanese interest rates can influence currency valuations, bond markets and global investment flows.

The survey results provide a snapshot of current economist expectations rather than a commitment from Japanese policymakers. The actual direction of monetary policy will depend on economic conditions and decisions made by the Bank of Japan.

Nevertheless, the latest figures show that expectations have changed considerably, with a majority of economists now anticipating a September rate increase and a narrow majority forecasting rates of at least 1.50% by the first quarter of 2027.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.