The Bank of Japan is expected to keep its key interest rate steady at its March 19 meeting, with over two-thirds of economists expecting a 25-basis-point hike to 0.75% in the third quarter, most likely in July, a Reuters poll showed.
The survey also found 90% of economists expecting negative or somewhat negative effects on the Japanese economy from U.S. President Donald Trump's tariff policies.
The results show the BOJ remains a global outlier in its push for slightly tighter monetary conditions as chaotic U.S. tariff policy changes rattle financial markets and reignite concerns over a global economic slowdown.
All but one of 62 economists in the March 4-11 poll forecast no change to interest rates in the March 18-19 meeting. A small minority, 18 out of 61, saw at least one 25-basis-point hike to 0.75% in the April-June quarter, similar to last month's survey.
About 70% of respondents, 40 of 57, predicted a rate hike to 0.75% in the third quarter, up slightly from over 65% seen in February.
In a smaller sample of 37 who predicted a hike for a specific month, 70%, or 26, picked July, up from 59%. Another 14%, five, said June, while three picked April-May, and one each selected March, September or October.
"The need to raise interest rates has decreased at the moment, partly because the depreciation of the yen has stopped and the pressure for rising import prices has eased somewhat," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
"We expect the next rate hike to take place in July, when the results of this fiscal year's wage negotiations can be confirmed statistically."
Markets are pricing in a quarter point rate hike in Japan by around September or October and see about a 25% chance of another hike after that, with a total of 31.4 basis points of rate increases priced in by December.
Whether the central bank takes action then or later this year will depend on the price outlook as well as how Trump's policies affect financial markets, the sources said.
Many of Japan's biggest companies met union demands for substantial wage hikes for a third consecutive year on Wednesday, giving the BOJ more leeway to raise interest rates.
The median prediction for the end-year rate was 0.75% and end-March 2026 was 1.00%, the poll showed, unchanged from February.
Kento Minami, economist at Daiwa Securities, said there was no reason for the BOJ to tweak rates in a hurry at a time when the market is unstable.
About 90% of economists, 28 of 31, said in this month's poll that Trump's tariff policies announced so far would either negatively or somewhat negatively affect Japan's economy, roughly in line with 94% from a December poll.
"In addition to the direct impact on exports, the strong sense of uncertainty about the future is making it difficult for companies to plan production and investment," said Harumi Taguchi, principal economist at S&P Global Market Intelligence.
"The risk of downward pressure on capital investment is increasing."
(Other stories from the Reuters global economic poll)
