Poll: Bank of Japan to hold key interest rate at 0.50% through year-end, say 52% of economists

Poll: Bank of Japan to hold key interest rate at 0.50% through year-end, say 52% of economists

A Reuters poll indicates that 52% of economists expect the Bank of Japan (BOJ) to hold its key interest rate at 0.50% through the end of the year. The U.S. Treasury Department has urged the BOJ to continue with monetary tightening, which would support the normalization of the yen's weakness and rebalance bilateral trade. The Treasury's exchange-rate report to Congress, released on Thursday, stated that BOJ policy tightening should proceed in response to domestic economic fundamentals, including growth and inflation [1].

The BOJ ended its massive monetary stimulus last year and raised short-term interest rates to 0.5% in January, signaling a readiness to raise rates further. However, the economic repercussions from higher U.S. tariffs have forced the central bank to cut its growth forecasts in May. The slow pace at which the BOJ is raising interest rates has been seen by markets as a key factor keeping the yen weak against other currencies [2].

The U.S. Treasury has also emphasized that government investment vehicles, such as large public pension funds, should invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes. This advice comes as Japan, along with other countries like China, South Korea, Taiwan, Singapore, Vietnam, Germany, Ireland, and Switzerland, are on the Treasury's monitoring list for extra foreign exchange scrutiny [3].

Japanese Finance Minister Katsunobu Kato has stated that the government leaves monetary policy decisions to the BOJ, while former top currency diplomat Mitsuhiro Furusawa noted that the timing of the rate hike would be tricky due to the current uncertainty [4].

References:
[1] https://www.freemalaysiatoday.com/category/business/2025/06/06/us-treasury-says-boj-should-continue-to-tighten-policy
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L2N3S9002:0-boj-should-continue-to-tighten-policy-us-treasury-says/
[3] https://www.investing.com/news/forex-news/boj-should-continue-to-tighten-policy-us-treasury-says-4084243
[4] https://money.usnews.com/investing/news/articles/2025-06-05/boj-should-continue-to-tighten-policy-us-treasury-says