According to the latest survey, nearly three-quarters of analysts predict that the Bank of Japan will raise interest rates next week, reflecting an increase in expectations following Governor Kazuo Ueda's indication that the Board of Directors will discuss this move.

The survey shows that among 53 economists, about 74% predict that the Bank of Japan will raise interest rates at the end of its two-day meeting on January 24, up from 52% in the previous survey. About 23% expect the Bank of Japan to raise rates in March.

Nearly three-quarters of economists expect the Bank of Japan to raise interest rates next week.

Previously, Ueda reiterated the comments made by Bank of Japan Deputy Governor Masayoshi Amamiya this week, stating that the central bank will consider raising interest rates at this meeting, which boosted the yen's exchange rates and increased market expectations for a rate hike.

Many economists pointed out that a rate hike is possible unless Trump returns to the White House four days before the Bank of Japan makes its policy decision and triggers turmoil in the global financial markets.

UBS Group's Chief Japan Economist Masamichi Adachi wrote in his survey response: "The decision to raise rates will largely depend on the previous conditions in the financial markets. If there is no shock, a rate hike is possible."

Sources revealed earlier this week that as long as Trump's return does not trigger too many negative surprises, there is a high likelihood of an interest rate hike by Bank of Japan officials.

Nearly half of the economists surveyed indicated that Trump is unlikely or very unlikely to suppress the global economic outlook or disrupt financial market stability before the Bank of Japan meeting.

About a quarter of the economists stated that such a situation is likely or very likely to occur, while the remaining economists found it difficult to determine.

Since the last meeting in December, data shows that the cost of living in Japan has remained high, with the economy gradually recovering. 90% of Analysts believe that Japan’s economic and inflation conditions justify a rise in borrowing costs at this meeting.

Kazuo Ueda has repeatedly stated that the momentum of wage increases and the uncertainty of USA economic policies are the two main factors that need to be resolved before an interest rate hike. This week, the Governor of the Bank of Japan and his Deputy expressed greater confidence in the momentum of wage increases after the meeting of branch managers earlier this month.

Economists also seem to agree with this view, as 78% of them indicated that the spring wage negotiations have gathered enough momentum to raise policy interest rates next week.

Taro Kimura, an economist at Bloomberg Economics, stated, 'The possibility of the Bank of Japan raising interest rates this time is very high.' He mentioned, 'In fact, failing to raise interest rates may be harder to explain.' The economic situation aligns with the Bank of Japan's forecasts, and inflation prospects in the coming years will approach its target.

The weakness of the yen is also seen as a key factor. About 69% of economists stated that the recent decline of the yen has increased the likelihood of an interest rate hike at this meeting.

Last week, the exchange rate of the yen against the dollar fell to a six-month low, close to the key level of 160, and then this week the yen against the dollar reduced its losses driven by rising expectations of an interest rate adjustment by the Bank of Japan.

Eiji Kitada, Chief Economist at the Shinkin Central Bank Research Institute, stated, 'With the yen approaching 160, it will prompt the Bank of Japan to raise interest rates again.'

This week, one of the deputy governors of the Bank of Japan, Masayoshi Amamiya, delivered a highly anticipated speech in which he hinted at the possibility of raising interest rates.

About 68% of economists believe that the speech increased the likelihood of a rate hike in January, while 15% view it as Neutral, and another 15% find it difficult to determine the implications of the speech.

The speech by Vice President Nobuyoshi Okano indicates that the sustainability of wage increases and the uncertainty of the impact of USA government policies have diminished," said Marcel Thieliant, Head of Asia Pacific at Capital Economics. "Therefore, we expect the central bank to raise interest rates at the January meeting."

Editor/danial