A Reuters poll found 54 of 78 economists expect the Bank of Japan (BOJ) to raise its policy rate to 1.50% in the fourth quarter of 2026, a forecast that puts variable-rate household borrowing in focus.
About 80% of the 54 respondents who named a month chose December, Reuters reported. Two percent chose the meeting ending Oct. 30. The results are forecasts: the BOJ has announced no December increase and has set no fixed quarterly schedule.
At its Sept. 18 meeting, the BOJ voted 7-2 to raise its overnight rate target to around 1.25%; the new guideline took effect Sept. 24. That followed a June increase to around 1.00%, effective June 17. The bank said it would continue adjusting rates as underlying inflation approached its 2% target, with future moves based on economic activity, prices and financial conditions. It cited crude oil prices, yen depreciation and rising inflation expectations among its price risks.
BOJ Policy Board member Junko Koeda said housing loans make up most household liabilities, and most of those loans have variable rates linked to prime lending rates. In an Oct. 15 speech, she said the bank still needed to examine how accumulated rate increases affect household behavior. Koeda also said the BOJ “should not become overly cautious” about raising its policy rate.
The September vote showed differing views on the economy. One dissenter cited inflation below 2% and concerns about economic strength; the other said activity and prices had not accelerated enough to warrant a rate increase. Takeshi Minami, chief economist at Norinchukin Research Institute, told Reuters, “The economy is not overheating to the extent that would warrant consecutive rate hikes.”
In the Reuters survey, 39 of 65 analysts expected the rate to reach 1.75% by the end of June 2027. Separately, 51% of 41 respondents saw an eventual peak of 2.00% or higher, up from 40% in September and 36% in August.
Four unnamed sources previously told Reuters they expected an October hold, but said another yen decline that raised import costs and fed broader inflation could change their view. They considered a December increase possible. EconoTimes previously covered the sources’ October hold outlook.
The BOJ’s next meeting is scheduled for Oct. 29-30, with its policy statement and updated outlook due Oct. 30. Another meeting is set for Dec. 17-18.
