The Bank of Japan is highly likely to raise interest rates this quarter, but whether the action will take place in April or June remains debated.

BlockBeats News, on April 16, according to a Reuters survey, nearly two-thirds of economists predict that the Bank of Japan will raise its benchmark interest rate to 1% by the end of June. Amid uncertainties brought by the Iran war, the market believes the probability of a rate hike this month or in June is roughly the same.

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.-Israel war against Iran on February 28. If anything, the conflict has heightened market concerns about rising energy prices, renewed inflationary pressures, and further yen depreciation, thereby strengthening hawkish rate hike expectations.

In the survey conducted from April 7 to 14, 46 out of 71 economists (65%) forecast that the policy rate will rise to 1% by the end of June, up from 60% in the March survey and 58% in February. Of the 40 economists who gave a clear timing, 38% chose April and 35% chose June. In last month's survey, support for a June rate hike was highest at 32%, followed by 30% for July and 27% for April.

As for after June, the median forecast shows the Bank of Japan will raise borrowing costs to 1.25% in the fourth quarter, slightly earlier than previously expected. The median also suggests the Bank of Japan will raise rates by another 25 basis points to 1.50% in the third quarter of 2027, with rates staying at that level until the year's end, though a few institutions expect it to rise to 1.75%. (Golden Ten Data)