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 percent forecast an interest rate hike to at least 0.20 percent by the end of the year.
The findings reflect forecasters’ stronger conviction that the BOJ will gently tighten policy even as most other major central banks look toward easing.
Although the Japanese central bank ended negative rates in March, it has stuck to its guidance of buying roughly 6 trillion yen ($38.3 billion) per month of government bonds to avoid sudden spikes in yields.
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.
Forty-one percent of economists, or 11 of 27, predicted the BOJ would make a decision on bond-buying reduction as early as the June meeting, while another 22 percent said July, the May 16-22 poll found.
“The decision to start (bond purchase reductions) in the early stages of normalization is already seen as a consensus among policymakers and appropriate in terms of reducing additional yen depreciation pressure,” said Ayako Fujita, chief Japan economist at JPMorgan Securities.
Three economists opted for September, while another three said the bank would wait until 2025 or later.
The BOJ made an unannounced cut last week to the amount of Japanese government bonds it offered to buy in a regular purchase operation and Japan’s 10-year government bond yield crossed 1 percent for the first time in 12 years on Friday, with expectations of further policy tightening.
