The results of a Reuters poll of 54 economists conducted from August 13 to 19 showed that 57% of economists believe that the Central Bank of Japan will raise interest rates again this year, which is likely to happen at the December meeting. The median prediction for the rate at end-year was 0,25% higher, at 0.50%. The findings reflect analysts' conviction that the Bank of Japan is undefined from gradually retreating from decades of huge monetary stimulus.
Last month, the Bank of Japan surprised many market participants by raising the interest rate to 0.25%. This happened just four months after abandoning negative rates. At that time, the head of the Bank of Japan, Kazuo Ueda, said that it was likely that rates would rise steadily in the coming years.
"The current interest rate is extremely adaptive. The Bank of Japan is likely to continue to raise interest rates to a neutral level as long as the 2% price stability target is expected to be achieved," said economists at Itochu Research Institute.
According to official data, Japan's GDP grew by 3.1% per annum in the second quarter, exceeding economists' forecasts (+2.1%), and offsetting a 2.3% drop in the first quarter, helped by strong consumption growth. Meanwhile, economists polled by Reuters forecast that the economy will expand by 0.6% this fiscal year ending March 2025 and by 1.1% next fiscal year. Inflation is projected to average 2.4% this fiscal year and 1.9% next fiscal year.