Economists remain split on timing of BOJ’s next rate hike: Reuters poll By Reuters

TOKYO (Reuters) – Economists remain split over the timing of the Bank of Japan’s next interest rate hike, according to a new Reuters poll, after the central bank’s decision to announce a quantitative tightening plan next month.

The BOJ said on Friday it would start trimming its bond purchases and announce a detailed plan on reducing its nearly $5 trillion balance sheet in July. It maintained its short-term policy target at 0%-0.1%.

Of the 29 economists polled by Reuters on Monday, 31% said they expected the BOJ to raise interest rates at its next policy meeting on July 30-31.

Another 41% forecast the next hike would come in October. Slightly more than 20% went with September, while the remainder did not expect a rate hike until 2025, the poll showed.

The results were roughly in line with a regular, monthly Reuters poll taken before the BOJ’s policy meeting last week.

While the BOJ could hike rates in July, the hurdles of doing it simultaneously with bond-buying tapering are “quite high” considering their impact on the market, said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in a research note on Monday. He projected the next rate hike would come in October.

“The BOJ wants to focus (on) scaling back bond purchases at the next meeting,” said Stefan Angrick, senior economist at Moody’s (NYSE:) Analytics, one of two firms that revised rate-hike forecasts to September from July.

September “makes sense for a rate hike” as key data, including the April-June gross domestic product data that are important for BOJ decision, will be available, he added.

($1 = 157.4700 yen)