BOJ preview: rate hike uncertain, but QE exit in sight
But the BOJ is widely expected to flag an end to its quantitative easing programs, after it said in its June meeting that it will elaborate on its plans to taper down its asset purchases during the July meeting.
“At a minimum, upside risks to inflation have intensified. If the BoJ does raise its inflation track or say that upside inflation risks are intensifying, then this should be a rationale to tighten policy according to Ueda’s rhetoric. Thus, we expect the BoJ to raise rates by 15bp, taking the policy range to 15bp-25bp,” ANZ analysts wrote in a note.
Media reports also suggested that Governor Kazuo Ueda was reluctant to hike rates due to concerns over sluggish consumption. Recent data showed the Japanese economy shrank much more than expected in the first quarter, weighed especially by weak consumption.
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