TOKYO, May 15 (Reuters) – The Bank of Japan will raise its key interest rate to 1.0% in June, nearly two-thirds of economists said in a Reuters poll, as it presses ahead with \u200befforts to normalise monetary policy amid rising inflation concerns from the war in Iran.<\/p>\n
The policy rate was held steady \u200cat 0.75% last month<\/a> to assess repercussions from the conflict but three of the BOJ’s nine board members dissented and called for a hike to 1.00%, signalling growing alarm<\/a> over inflationary pressures from the war-driven energy shock.<\/p>\n Sign up here.<\/a><\/p>\n BOJ board member Kazuyuki Masu, who voted to keep rates steady in April, said on Thursday<\/a> the bank should raise interest \u200brates as soon as possible if there are no clear signs of an economic slowdown, suggesting he could join dissenters \u200bin backing a rate hike next month.In the May 7-14 poll, 65% of economists, 40 of 62, forecast \u2060the policy rate would rise to 1.0% by end-June, similar to an April survey<\/a>. All but one of 62 respondents expected a hike by \u200bend-September.<\/p>\n Median forecasts showed the BOJ raising rates to 1.25% in the fourth quarter and to 1.50% in the third quarter next year, the same \u200bas last month’s poll.<\/p>\n “Given that economic, price and wage conditions that would make a rate hike feasible are, at present, still intact … we see the June meeting, roughly six months after the December 2025 meeting, as the most likely timing for the next hike,” said Yusuke Matsuo, senior market economist at Mizuho Securities.<\/p>\n RATE \u200bHIKE TO THE YEN’S RESCUEThe BOJ has also come under pressure after holding rates steady in April while Japanese authorities conducted repeated currency intervention<\/a> \u200bto support the yen as it slid past the 160-per-dollar mark.<\/p>\n Many argue FX interventions like the roughly 10 trillion yen ($63.35 billion) spent in currency markets in \u200crecent weeks \u2060to stem the yen’s slide are less effective without tighter monetary policy.<\/p>\n Nomura Securities Chief Economist Kyohei Morita said the BOJ would also be inclined to raise rates in June to address upside price risks stemming from yen depreciation, which is hurting the Japanese economy by pushing up import costs.<\/p>\n Several economists, though, noted the BOJ may want to hold off if uncertainty over the war persists with Japan facing weaker consumption and \u200bthe risk of production cuts due \u200bto supply chain disruptions.<\/p>\n Prime Minister \u2060Sanae Takaichi, a longstanding proponent of loose monetary policy, has also previously pushed back against BOJ tightening.<\/p>\n INFLATION A BIGGER THREAT THAN DEMAND SLOWDOWNUnlike its U.S. and European peers, Japan’s policy rate at 0.75% remains below \u200bthe neutral <\/a> rate<\/a> that neither stimulates nor restricts economic activity. With inflation around 2% the BOJ risks overheating the \u200beconomy and weakening \u2060the yen further by keeping real borrowing costs deeply negative.<\/p>\n In the poll almost three-quarters of respondents, or 28 of 39, who answered an additional question said sustained inflation posed a bigger threat to the Japanese economy than a demand slowdown over the next 12 months.<\/p>\n “Authorities are trying to stem \u2060the yen’s \u200bslide by signalling their readiness to intervene, but the effect is likely to be \u200blimited given negative real interest rates and the risk that high crude oil prices will worsen the trade balance,” said Hiroshi Namioka, chief strategist at T&D Asset Management.<\/p>\n (Other stories \u200bfrom the Reuters global economic poll)<\/p>\n ($1 = 157.8500 yen)<\/p>\n Reporting by Satoshi Sugiyama; Polling by Renusri K; Editing by Vivek Mishra, Ross Finley and Sam Holmes<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n Purchase Licensing Rights<\/a><\/a><\/p>\n Reports on all things breaking news as well as economic indicators. Previously worked at The Japan Times covering domestic politics and diplomacy. Syracuse University’s S.I. Newhouse School of Public Communications alumnus. <\/p>\n","protected":false},"excerpt":{"rendered":"TOKYO, May 15 (Reuters) – The Bank of Japan will raise its key interest rate to 1.0% in…\n","protected":false},"author":2,"featured_media":23254,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[18359,72,10381,1713,10371,10417,10386,10384,10380,10401,18364,10372,191,189,10373,654,10402,10403,188,190,10382,10376,18360,10378,18361,18358,18363,18362],"class_list":["post-23253","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-apoll","tag-asia","tag-asxpac","tag-boj","tag-cen","tag-destortao","tag-destousbsm","tag-destseabs","tag-easia","tag-eci","tag-ecilt-jp","tag-eco","tag-economy","tag-economy-of-japan","tag-frx","tag-gdp","tag-infl","tag-int","tag-japans-economy","tag-japanese-economy","tag-jp","tag-mce","tag-mtpix","tag-plcy","tag-rep","tag-rpoll","tag-topcmb","tag-topnws"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/23253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=23253"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/23253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/23254"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=23253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=23253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=23253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}