The Bank of Japan is highly likely to raise interest rates this quarter, but whether the move will occur in April or June remains controversial.

According to Mars Finance, on April 16th, nearly two-thirds of economists in a Reuters poll predicted that the Bank of Japan would raise its benchmark interest rate to 1% by the end of June. Amid the uncertainty surrounding the Iran war, the market believes the probability of a rate hike this month or in June is roughly equal. Economists still widely expect the Bank of Japan to tighten policy again this quarter, a view largely unchanged since the US-Israel conflict with Iran on February 28th. If there is any impact, it is that the conflict has exacerbated market concerns about rising energy prices, renewed inflationary pressures, and further weakening of the yen, thus reinforcing hawkish expectations for a rate hike. In the survey conducted from April 7th to 14th, 46 out of 71 economists (65%) predicted that the policy rate would rise to 1% by the end of June, higher than the 60% in the March survey and 58% in February. Of the 40 economists who gave a specific timing prediction, 38% chose April and 35% chose June. In last month's survey, the highest percentage (32%) supported a rate hike in June, compared to 30% in July and 27% in April. Looking beyond June, the median forecast indicates the Bank of Japan will raise borrowing costs to 1.25% in the fourth quarter, slightly earlier than previously expected. The median forecast also shows the Bank of Japan will raise rates by another 25 basis points to 1.50% in the third quarter of 2027, after which rates will remain unchanged until the end of the year; however, a few institutions predict a rise to 1.75%. (Jinshi)