BY SATOSHI SUGIYAMA
TOKYO – The Bank of Japan is likely to hold its key interest rate through June, showed a Reuters survey of economists, with a 25-basis-point hike next quarter expected by a slight majority of respondents rather than over two-thirds in a poll last month.
Nearly 90 percent of respondents also said the risk of recession in Japan was low.
The responses reflect economists’ view that US President Donald Trump’s vacillating tariff action has disrupted but not derailed the central bank’s quest for slightly tighter monetary conditions – even as many peers cut borrowing costs to support economies and mitigate the impact of Trump’s trade war.
In an April 14-21 poll, 84 percent of economists, or 47 of 56, forecast no change to interest rates at the BOJ’s next two policy meetings on April 30-May 1 and June 16-17.
Only 52 percent of economists, 27 of 52, expect a hike in the bank’s short-term interest rate to 0.75 percent from 0.5 percent in the July-September quarter, down from 70 percent of respondents in March.
“The impact of Trump’s tariffs has made the economic outlook extremely uncertain, and with (corporate) earnings expected to deteriorate particularly in the manufacturing sector, we expect the BOJ to delay its interest rate hike,” said economist Tsukasa Koizumi at Hamagin Research Institute.
At the same time, the impact of tariffs is not significant enough to alter the BOJ’s policy stance, said Daiwa Securities economist Kento Minami.
