Author: Yang Dapan
According to a survey by foreign media, the Bank of Japan is expected to keep its key interest rate unchanged at its March 19 meeting, with more than two-thirds of economists expecting the Bank of Japan to raise rates by 25 basis points to 0.75% in the third quarter (most likely in July).
The survey also found that 90% of economists expect US President Trump's tariff policy to have a negative or slightly negative impact on the Japanese economy.
The survey results show that, amid the turmoil in the US tariff policy changes that have shaken the financial markets and rekindled concerns about a global economic slowdown, the Bank of Japan remains an outlier in pushing for monetary policy tightening.
In the survey conducted from March 4 to 11, all but one of the 62 economists surveyed predicted that interest rates would remain unchanged at the March 18-19 meeting; while a small number of economists (18 out of 61) expect at least one 25 basis point rate hike to 0.75% in the April to June quarter, similar to the previous month's survey.
About 70% of respondents (40 out of 57) expect a rate hike to 0.75% in the third quarter, slightly higher than the over 65% expectation in February.
In the small sample of 37 respondents who predicted the specific month of the rate hike, 70% (26 people) chose July, up from the previous 59%; another 14% (5 people) chose June, 3 people chose April to May, and 1 person each chose March, September or October.
Takumi Tsunoda, a senior economist at the Shinkin Central Bank Research Institute, said, "The need for a rate hike has diminished, partly because the yen's depreciation has stopped and the upward pressure on import prices has eased. We expect the Bank of Japan to raise rates next in July, when the wage negotiations for the fiscal year will be confirmed by statistical data."
The market expects Japan to raise rates by 25 basis points around September to October, and the probability of further rate hikes is estimated at around 25% by December, with a cumulative rate hike of 31.4 basis points.
Previously, sources had revealed that the possibility of another rate hike by the Bank of Japan as early as May may be discussed due to inflationary pressures from wage increases and rising food costs.
The sources said that whether the Bank of Japan acts in May or later this year will depend on the price outlook and the impact of Trump's policies on the financial markets.
Many of Japan's major companies have met the unions' demands for significant pay rises for the third consecutive year this week, providing the Bank of Japan with more room to raise rates further.
The survey shows that the median forecast for the year-end rate is 0.75%, and the median forecast for the end of March 2026 is 1.00%, both unchanged from February.
Kento Minami, an economist at Daiwa Securities, said that in the midst of market instability, the Bank of Japan has no reason to hastily adjust interest rates.
In this month's foreign media survey, about 90% of economists (28 out of 31) said that the tariff policies announced by Trump so far would have a negative or slightly negative impact on the Japanese economy, roughly consistent with the 94% in the December survey.
Harumi Taguchi, chief economist at S&P Global Market Intelligence, said, "In addition to the direct impact on exports, the strong uncertainty going forward also makes it difficult for companies to plan their production and investment. The downward pressure risk on capital investment is increasing."
