Officials from the Bank of Japan have consecutively signaled that over 70% of observers expect an interest rate hike next week

According to the latest survey, nearly three-quarters of observers of the Bank of Japan predict that the central bank will raise interest rates next week, reflecting an increase in expectations after Bank of Japan Governor Kazuo Ueda indicated that the board would 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 last 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 would consider raising rates at this meeting, which boosted the yen's exchange rate and increased market expectations for a rate hike. Many economists pointed out that unless Trump returns to the White House four days before the Bank of Japan makes its policy decision and triggers turmoil in global financial markets, a rate hike is likely.

Masamichi Adachi, Chief Japan Economist at UBS Securities, wrote in his survey response: "The decision to raise rates will largely depend on the financial market conditions beforehand. If there are no shocks, a rate hike is possible."

Insiders revealed earlier this week that as long as Trump's return does not trigger too many negative surprises, there is a strong possibility that Bank of Japan officials will raise rates.

Nearly half of the economists surveyed indicated that it is unlikely or very unlikely that Trump will suppress the global economic outlook or undermine financial market stability before the Bank of Japan meeting. About a quarter of economists said such a scenario is likely or very likely, while the remaining economists found it difficult to judge.

Since the last meeting in December, data has shown that Japan's cost of living remains high, and the economy is gradually recovering. 90% of analysts believe that Japan's economic and inflation conditions justify an increase in borrowing costs at this meeting.

Ueda has repeatedly stated that the momentum of wage increases and the uncertainty of U.S. economic policy are the two main factors that need to be resolved before a rate hike. This week, the Bank of Japan Governor and his Deputy Governor expressed greater confidence in the momentum of wage increases following the Bank of Japan branch managers' meeting earlier this month.

Economists also seem to agree with this view, with 78% of economists stating that the spring wage negotiations have sufficient momentum to raise the policy interest rate next week.

Taro Kimura, an economist at Bloomberg Economics, stated: "The likelihood of the Bank of Japan raising rates this time is very high." He added: "In fact, not raising rates may be harder to explain." The economic situation aligns with the Bank of Japan's forecasts, and the inflation outlook will approach its target in the coming years.

The weakness of the yen is also seen as a key factor. About 69% of economists indicated that the recent decline of the yen has increased the likelihood of a rate hike at this meeting. Last week, the yen fell to a six-month low against the dollar, approaching the critical level of 160, and then this week, the yen's decline against the dollar was reduced due to rising expectations for adjustments in the Bank of Japan's interest rates Eiji Kitada, chief economist at BinYin Comprehensive Research Institute, stated, "The yen approaching 160 will prompt the Bank of Japan to raise interest rates again."

This week, one of the deputy governors of the Bank of Japan, Noriyuki Ishi, delivered a highly anticipated speech in which he hinted at the possibility of an interest rate hike.

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

"The speech by Deputy Governor Ishi indicates that the sustainability of wage increases and the uncertainty of the impact of U.S. 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."