The sharp shift in economist expectations suggests the Bank of Japan is now genuinely behind the curve on tightening, with the terminal rate outlook moving higher and the timeline compressing within just one month. For yen crosses, that raises the stakes around the September meeting significantly, as a hike is now largely priced in and any delay risks a disorderly reaction given how quickly consensus has shifted. At the same time, the Reuters poll's finding that last month's coordinated intervention was largely ineffective suggests the yen remains vulnerable to renewed selling pressure regardless of what the BOJ does, particularly if Takaichi's fiscal plans proceed without clear funding. Traders are likely to treat the September decision as a binary event risk for JPY pairs, with confirmation of a hike doing less to support the yen than a surprise hold would do to weaken it further.

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September in close to being locked in

• BOJ likely to hike next month and again in January, says ex-board member
• MUFG sees yen risk skewed weaker despite 80% BOJ hike odds
• MUFG sees yen risk skewed weaker despite 80% BOJ hike odds

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The BOJ has moved from an outside chance of a September hike to the consensus view in the space of one month, and economists still do not think that will be enough to save the yen.

Reuters poll highlights

• A Reuters poll of economists shows 57% now expect the BOJ to raise its benchmark rate to 1.25% in September, up from just 5% in July's survey.
• A slim majority expect the terminal rate to reach at least 1.50% by the first quarter of 2027, three months earlier than the previous poll suggested.
• Around 60% of respondents see the policy rate reaching at least 1.75% by the end of the third quarter of 2027, while the share expecting a terminal rate of 2% or higher rose from 23% to 36% month on month.
• The BOJ raised rates to a three-decade high of 1% in June.
• More than two thirds of economists surveyed said last month's rare joint Japan-US yen-buying intervention was largely or completely ineffective, describing it as having delayed rather than resolved the underlying pressure on the currency.
• 89% of economists said Prime Minister Sanae Takaichi's fiscal policy, including planned tax cuts on food items, is contributing to yen weakness given lingering doubts about how the measures will be funded.

The Bank of Japan is now expected to move faster on interest-rate increases than economists anticipated just a month ago, according to a Reuters poll, with a September increase to 1.25% now the consensus view rather than an outside possibility. The August 17 to 24 survey found 57% of economists expect the move next month, compared with only 5% who held that view in July's poll, marking one of the sharpest shifts in BOJ rate expectations in recent memory.

The poll comes weeks after Reuters reported that the central bank was preparing to raise rates as early as September and was weighing a more aggressive pace of tightening than its historical rhythm of roughly two hikes a year. A separate nudge from US Treasury Secretary Scott Bessent has reportedly reinforced market expectations for a September move. JPMorgan Securities chief Japan economist Ayako Fujita said in the poll that with a September hike already largely priced into markets, an early policy adjustment has become unavoidable, warning that delaying the move risks destabilising markets that have already positioned for it.

The shift extends beyond the immediate timeline. Nearly two thirds of the 54 analysts who answered a related question now expect the policy rate to reach at least 1.50% by the end of March next year, three months sooner than projected in the July poll. Around 60% expect the rate to hit at least 1.75% by the third quarter of 2027, and among a smaller group of respondents asked specifically about the terminal rate, half now see 1.75% as the eventual peak, up from just 19% a month earlier. The proportion expecting a terminal rate of 2% or higher rose to 36% from 23% over the same period.

Behind the faster tightening path lies persistent yen weakness that has proven resistant to policy intervention. Japan and the United States conducted a rare joint currency intervention last month after the yen fell to 40-year lows, an effort aimed at containing a selloff in the currency and in Japanese government bonds that had begun spilling over into US Treasury yields. More than two thirds of economists surveyed, 18 of 26, described that intervention as largely or entirely ineffective, with many characterising it as having only delayed rather than resolved the currency's underlying weakness.

Fiscal policy under Prime Minister Sanae Takaichi was identified as a significant contributing factor, with 89% of economists, 25 of 28, saying her government's approach is adding to pressure on the yen. Concerns centre on how planned tax cuts, including reductions on food items, will be funded. Nomura Securities chief economist Kyohei Morita said the fiscal policy raises inflation expectations and intensifies concerns that the BOJ is falling behind the curve, and cautioned that a consumption tax cut implemented without clear funding could accelerate yen depreciation further, including through foreign investors selling Japanese government bonds.

The BOJ last raised rates in June, taking its benchmark to a three-decade high of 1%, a move that came against a backdrop of growing central bank wariness about inflation pressures stemming from the wider US-Israeli conflict with Iran, alongside the sustained pressure on the currency itself.

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Bank of Japan next meet mid-September: