-- The Bank of Japan will raise its interest rate in July in addition to unveiling a roadmap for its path toward quantitative tightening, according to one-third of economists surveyed by Bloomberg.Some 33% of 43 economists said the upper bound of the policy rate will be raised from 0.1% at the board meeting that concludes on July 31, the survey conducted on Tuesday showed. Prior to this month’s meeting, about the same percentage were penciling in July for a hike.
Whatever the outcome in July, the survey results show there will be intense interest with possible market volatility ahead of the event. Governor Kazuo Ueda has said a July hike is “of course” possible if data warrant it. His comments were consistent with the tone reflected in a record of the June 13-14 meeting, when the nine-member board held lively discussions over the case for a rate move.
One-third expects the pace of bond buying to slow every quarter while 36% said it will be done every six months, according to the poll. Some 17% said the change will be every year. The median estimate from economists was for the amount of outstanding holdings to be reduced by about 11% to ¥520 trillion in two years, according to the survey. That would work out to roughly a ¥2.7 trillion reduction in bond holdings per month on average. The size of that holding would still be just 7% below the scale of Japan’s economy.
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