BOJ Likely to Maintain Low Rates Until December Amid New Leadership’s Cautious Stance

Most economists anticipate the Bank of Japan will hold its current interest rate policy until at least December, according to a survey of 50 analysts. Only 10% now expect a rate hike in October, down sharply from 36% previously. The shift reflects growing caution under new Prime Minister Sanae Takaichi, who has historically supported accommodative monetary policies.

Takaichi's election as leader of Japan's ruling party has introduced a preference for stability over abrupt tightening. While she hasn't dictated central bank actions, her long-standing advocacy for low borrowing costs suggests continued easy money policies. Economists note the BOJ will likely align with government priorities to avoid friction, delaying any rate normalization.

"Takaichi probably views rate hikes as undesirable even after moderating her rhetoric," said Masato Koike, senior economist at Sompo Institute Plus. Policymakers are treading carefully to maintain public confidence while supporting economic growth through cheap credit.