Economists predict the Bank of Japan will raise interest rates by at least 25 basis points in the October-December quarter, despite expectations of a U.S. Federal Reserve rate cut. Most analysts believe the BOJ will aim for slightly tighter monetary conditions, with a potential rate hike in October due to trade data and global economic uncertainties.

While 55% of economists expect a rate increase to 0.75% next quarter, the majority anticipate no change at the upcoming September policy meeting. BOJ Deputy Governor Ryozo Himino emphasized the importance of gradual rate hikes, citing high global economic uncertainty.

The central bank’s decision may also be influenced by Japan’s next prime minister. If fiscal dove Sanae Takaichi assumes office, the likelihood of further rate hikes could diminish. Analysts predict next year’s labour-management pay increase negotiations to be lower than this year’s 5.25%, with a median prediction of 4.80%.

Despite potential challenges from U.S. tariff policies impacting Japanese corporate profits, economists anticipate sustained growth around 5%, supporting the BOJ’s belief in a ‘virtuous cycle’ of wages and prices. Financial markets are pricing in a 50% chance of a rate hike by year-end, as global economic uncertainties persist.

Read more at Yahoo Finance: BOJ to raise interest rate again in Q4, majority of economists say: Reuters poll