According to Jinshi, a Reuters survey showed that although nearly 90% of economists expect the Bank of Japan to raise interest rates by the end of March next year, a slight majority believe that it will abandon another rate hike this year. The survey results highlight the challenges facing the Bank of Japan in normalizing policy.

Mari Iwashita, chief market economist at Daiwa Securities, said the Bank of Japan is unlikely to raise rates again after the House of Representatives election and before the next fiscal year budget is drawn up at the end of December. She also pointed out that the momentum of wage increases is increasing next year, and if the U.S. economy continues to be resilient, the conditions for raising interest rates will be in place by the time the Bank of Japan releases its quarterly outlook report in January next year.

Iwashita added that the BOJ may postpone its decision until March if it wants to observe the feasibility of the new U.S. administration’s policies and the outcome of spring wage negotiations.