BY SATOSHI SUGIYAMA
TOKYO — Most economists now expect the Bank of Japan will hold interest rates through September as it pauses to assess the effects of US tariffs, a Reuters survey showed, although a slight majority still see at least a 25-basis-point hike by year-end.
Those results echoed views expressed by BOJ rate-setters that US President Donald Trump’s sweeping tariffs have disrupted but not derailed the bank’s endeavours for slightly tighter monetary conditions, even as many peers are leaning toward reducing borrowing costs.
In the May 7-13 survey, 95 percent of economists, 59 of 62, forecast no change to interest rates at the BOJ’s next policy meeting concluding on June 17.
In a shift from last month, 67 percent of economists, 39 of 58, expect borrowing costs to stay at the current 0.50 percent in the July-September quarter. Around 36 percent of respondents, a minority, had anticipated no change in the interest rate during that period in an April poll.
“The BOJ will be unable to raise interest rates for the time being to assess the impact of Trump’s tariffs,” said Masato Koike, senior economist at Sompo Institute Plus.
Still, 52 percent of respondents foresaw at least a 25-basis-point increase in the key rate by the end of the year, the survey showed.
The median prediction for the end-September rate was 0.50 percent, as opposed to 0.75 percent in the April poll, while the end-December forecast remained unchanged at 0.75 percent.
“In the short term, the economy will slow down and the underlying rate of inflation will moderate, but the virtuous cycle of wages and prices is likely to continue,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
“If trade negotiations between the US and major countries progress, global economic activity will begin to recover,” Tsunoda said, adding the timing of the next rate hike is more likely to be delayed compared to previous projections.
Little changed from the April survey, 96 percent of respondents, 26 of 27, did not see the need for the BOJ to cut interest rates.
