Bloomberg survey: Bank of Japan to pause rate hike cycle due to economic risks

All 54 economists surveyed by Bloomberg believe the Bank of Japan will keep the benchmark rate at 0.5% as a result of this week's meeting. Meanwhile, the central bank's new quarterly forecasts for Japan's economy will be closely analyzed for any clues regarding the extent of the pause in the cycle of monetary policy tightening.

In the April report, the BOJ is expected to extend its forecast period by a year to include fiscal 2027. Bloomberg estimates that officials will set the projected core inflation rate at about 2% over that period.

So far, the central bank representatives have projected that the 2% inflation target will be reached in the second half of the three-year forecast period through fiscal 2026. Any delay in reaching that level could be interpreted by analysts as a sign that the BOJ is ready to slow the pace of rate hikes.

The Asian country's regulator has already raised borrowing costs three times since last March. However, as Bloomberg notes, large-scale tariff measures of the new US administration have complicated matters for the Bank of Japan, posing a threat to the growth of the country's economy.