Based on the latest economist survey data, the Bank of Japan(BoJ) is highly likely to postpone its first interest rate hike until July. Over three-quarters of the surveyed economists believe that by September this year, the Bank of Japan's key policy rate will rise from the current 0.75% (a 30-year high) to above 1%.

Interestingly, the pace set by the Bank of Japan is completely different from that of other major central banks worldwide. In recent years, major players like the Federal Reserve and the European Central Bank have been steadily cutting rates, while Japan has been exploring the possibility of raising rates. Economists generally predict that the Bank of Japan will eventually raise rates in multiple steps, bringing the rate to around 1.5%.

The issue is—new Prime Minister Sanae Takaichi's attitude has made the entire market nervous. Since taking office last October, she is famously known as a "dovish" supporter of monetary easing. She has publicly stated multiple times that she has a say in monetary policy and emphasizes maintaining low interest rates for environmental reasons. Just these comments alone have already caused quite a stir in the market.

What’s more explosive is that the Secretary-General of Japan’s ruling party recently revealed that Prime Minister Sanae Takaichi plans to dissolve the National Diet next week to hold a snap House of Representatives election. Several of her advisors have also hinted that further rate hikes carry risks. Such political developments undoubtedly add more uncertainty to the central bank’s rate hike plans.

In a monthly survey conducted by Reuters from January 6 to 13, most analysts believe the Bank of Japan will choose to remain on hold. Their reasoning is that the central bank needs time to assess the actual impact of the 25 basis point hike in December last year. Unless the yen continues to depreciate, putting pressure on domestic costs through imports, the bank is unlikely to rush into another rate increase.