A CNBC survey of economists showed the Bank of Japan is expected to raise its benchmark interest rate by 25 basis points this week.

The rate hike will take the Bank of Japan’s key interest rate to 0.5%, the highest level since 2008.

Eighteen of 19 economists overwhelmingly agreed on the prospect of a rate hike, with most pointing to a recent change in tone from the Bank of Japan’s leadership as driving their expectations. The survey was conducted from January 15 to 20.

public opinion Governor Ueda and speech Japanese Deputy Governor Ryozo Himino told business leaders last week that the Bank of Japan is willing to raise interest rates.

According to Reuters, Ueda said on January 16 that the central bank would raise interest rates if “the economy and prices continue to improve.”

Meanwhile, Cimino said the bank would discuss raising interest rates at its upcoming meeting, adding that it was “not normal” for real rates to remain negative once Japan overcomes deflationary factors.

Several economists polled by CNBC said the tone suggested resistance to a rate hike last month was waning.

However, they also noted that a major risk to this forecast is the uncertainty posed by Donald Trump’s presidency and its potential impact on financial markets and Japan’s economy.

Nomura Securities economist Uichiro Nozaki described Kimino’s speech as the “main catalyst” for them to raise rates.

“From the remarks of (Himino and Ueda), we judge that the Bank of Japan is more confident. In terms of wage increases, Himino said that achieving the 2024 wage increase in 2025 is the main scenario.”

Takesh Yamaguchi, chief Japan economist at Morgan Stanley MUFG Securities, backed his call for a rate hike, noting that recent comments from the Bank of Japan’s leadership suggest “the “Set a more positive tone, with uncertainty over the outlook for wage growth in fiscal 2025 and the incoming U.S. administration.”

Another common factor cited by economists in support of a rate hike is continued weakness in the yen, which had fallen to a six-month low of 158.37 before Cimino’s speech on January 14.

“The yen has depreciated significantly since the Bank of Japan decided to abandon raising interest rates in December,” said Stefan Angrick, associate director at Moody’s Analytics.

“This, coupled with a series of higher-than-expected inflation data for consumer, producer and import prices, increases the likelihood of monetary policy action in January.”

Rising expectations for a rate hike this week have supported the yen, which has appreciated 1.24% in the seven days to Tuesday. this JPY It strengthened between July and September before weakening to above 158 towards the end of last year.

LSEG data shows that the probability of a rate hike at the upcoming meeting is close to 88%.

Some economic indicators are already pointing in the right direction. Japan’s core inflation (excluding fresh food prices) has been at or above the Bank of Japan’s 2% target for 32 consecutive months and will remain so through 2024 Shunto sees biggest salary increase Negotiations lasted 33 years.

In his speech, Himino said the bank should pay close attention to wage increases in fiscal 2025 (April 2025 to March 2026).

“Every company faces unique challenges and raising wages is never a simple matter. But I would like to see wages rise as strongly in fiscal 2025 as we did in fiscal 2024,” he said.

However, household spending data did not show significant improvement. Household spending has declined year-on-year every month since March 2023, barring two small increases in April and July 2024.

Weak spending data could mean weaker demand, which would weaken the Bank of Japan’s “virtuous cycle.”