Overview
- Some Bank of Japan board members see scope to raise rates sooner than markets expect, with April cited as a distinct possibility if yen-driven cost pressures threaten to entrench inflation, according to four sources.
- The central bank is expected to keep policy unchanged at its Jan. 23 meeting after lifting the key rate to 0.75% in December, the highest level in about three decades.
- A Reuters survey conducted Jan. 6–13 found 97% of economists expect no changes in January and March, with July the most cited month for the next hike and 76% forecasting at least 1% by end-September.
- The median terminal-rate forecast in the poll rose to 1.5%, reflecting expectations of a gradual tightening path even as most respondents anticipate only one or two increases in 2026.
- Political uncertainty has increased as Prime Minister Sanae Takaichi, who favors low rates, plans a snap election, and sources say the BOJ may lift its 2026 growth and inflation projections next week as attention turns to the April meeting and wage settlements.