TOKYO, Japan: The Bank of Japan is expected to raise interest rates at least once more this year, likely in the third quarter, bringing the rate to 0.75 percent, according to a Reuters poll released this week.

While central banks in other major economies are considering rate cuts, the BOJ remains focused on gradually increasing borrowing costs. Over 65 percent of economists surveyed, 38 out of 58, predicted the next rate hike would come in July or September.

"It will be necessary to confirm the rate of pay rises in this year's wage talks and examine the impact of January's interest rate hike," said Junki Iwahashi, senior economist at Sumitomo Mitsui Trust Bank.

The Japanese swap market reflects expectations of further hikes, pricing in a 69 percent chance of two additional 25-basis-point increases by the end of 2025.

BOJ board members have signaled the need for continued rate hikes, warning that keeping rates too low could lead to excessive risk-taking and inflationary pressure.

July is seen as a likely timing for the next hike, as it would follow a six-month gap from January's decision and come after the Upper House election, noted Masato Koike, senior economist at Sompo Institute Plus.

The BOJ raised interest rates to 0.50 percent in January—the highest level since the 2008 financial crisis—citing progress toward its two percent inflation target.

Rising wages have also strengthened the case for rate hikes. The poll showed that analysts expect a five percent increase in pay during this year's spring labor-management negotiations, up from 4.75 percent in last month's survey.

"It is expected that high-level wage increases will be made to retain workers due to a shortage of manpower and prolonged inflation," said Kyohei Morita, chief economist at Nomura Securities.

However, Morita cautioned that some smaller firms may struggle to sustain wage hikes if profitability does not improve.

Economists forecast the BOJ's interest rate will reach one percent by March 2026. The long-term outlook remains uncertain, with predictions for the terminal rate ranging from 0.75 percent to two percent.