BOJ Policy Shift Gains Momentum: Rate Hike Cycle Enters Faster Lane

A recent survey of 52 Bank of Japan watchers reveals near-unanimous market expectations: the central bank will announce an interest rate hike at its upcoming policy meeting, with 100% of respondents anticipating the move. More significantly, approximately 93% of economists forecast a second hike before January next year.

Timeline and the Evolution of Market Expectations

Views on the timing of the second move show slight variations. About one-third of respondents predict an increase in December, while the majority lean toward January. The speed of this consensus formation is striking—in the previous survey conducted just two months ago in July, not a single economist had foreseen a policy change in September.

This dramatic shift in expectations is driven by two key factors. Domestically, persistent upside risks to inflation demand a more timely monetary policy response. Internationally, recent repeated public calls for action by figures such as U.S. Treasury Secretary Bessent have further cemented market convictions for a move this month.

The Pace of Tightening: From 'Semi-Annual' to 'Quarterly'

How fast will policy normalization proceed? This has become the core question for markets. Chief economist Kato of Totan Research noted in the survey: “The BOJ may signal to markets that future rate hike intervals will be around three months. The focus is on how strongly it will hint at the possibility of acting more frequently if conditions permit.”

The survey data clearly illustrates this accelerated pace:

  • Roughly 46% of respondents believe the BOJ’s hiking cycle will speed up to approximately once per quarter.
  • About 36% of economists expect a pace of every four to five months.
  • The share expecting a once-every-six-months rhythm has plummeted from 82% in July to just 6% now.

This indicates that within a few months, the market’s dominant outlook has shifted decisively from “gradual and measured” to “active and accelerated.” The Bank of Japan is actively reshaping its policy framework through action to address an evolving economic landscape.