BOJ to decide bond-purchase reduction by end-July, say economists
TOKYO - The Bank of Japan will decide to start tapering the size of its bond-buying by end-July, according to nearly two-thirds of economists polled by Reuters, while close to 90% forecast an interest rate hike to at least 0.20% by the end of the year.
However, the BOJ is facing growing political pressure to slow the yen's decline, blamed for squeezing households through higher import costs, and being compelled to take action such as slowing bond purchases and raising interest rates. Three economists opted for September, while another three said the bank would wait until 2025 or later.
Specifically, 47%, or 25 of 53, said borrowing costs would rise to between 0.20% and 0.35% in the July-September quarter. Another 41% of economists, 20 of 49, forecast that the BOJ will raise rates to either 0.20% or 0.25% in the October-December period. The median forecast showed the upper end target of the overnight call rate, currently at 0.10%, would be raised to 0.50% by the April-June quarter of next year, compared to the October-December quarter of 2025 predicted in the April poll.
In the poll, 85% of economists, or 22 of 26, said the government and BOJ will intervene to stem the Japanese currency from weakening further, down from 91% in April.
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