Economists have mixed forecasts regarding the timing of the Bank of Japan (BOJ)'s next rate hike. Four out of ten expect it to occur in October. Meanwhile, as many as three respondents anticipate it as soon as the next meeting in July.
According to a Reuters poll conducted on the 17th, among the 29 economists surveyed, 31% expect the BOJ to raise interest rates at the Monetary Policy Meeting scheduled for July 30-31.
Forty-one percent of respondents predicted an additional rate hike could happen in October. Those who identified September as the timing for the hike slightly exceeded 20%. The remainder forecast no further rate increases until 2025.
The results of this survey are almost identical to those from a poll conducted ahead of last week’s BOJ Monetary Policy Meeting.
Maruyama Yoshisama, Chief Economist at SMBC Nikko Securities, pointed out in an investor memo that if the BOJ raises rates simultaneously with reducing bond purchases, the market impact would be significant, posing considerable obstacles. He predicted the additional rate hike would occur in October.
Stephan Angry, Chief Economist at Moody’s Analytics, who initially expected a rate hike in July but postponed it to September, said, “I hope the BOJ focuses on tapering bond purchases at the next meeting.” He added that a September hike would be “reasonable” after reviewing key data, including GDP from April to June, which could influence the BOJ’s rate decision.
At the June Monetary Policy Meeting held last week, the BOJ kept the current benchmark interest rate unchanged at 0 to 0.1%. Alongside this, the BOJ decided to reduce the monthly long-term government bond purchases, which had been around 6 trillion yen, starting next month. The scale and pace of the reduction will be finalized at the next meeting after consulting market participants. Previously, in March, the BOJ ended its negative interest rate policy for the first time in 17 years by raising the benchmark rate from -0.1%.
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