Analysts say the BoJ will raise interest rates again as early as July, and the economy is unlikely to fall into recession

The Bank of Japan (BoJ) will hold interest rate meetings on Wednesday and Thursday this week. The market generally expects that the benchmark interest rate will remain at 0.5%, and believes that the next rate hike may not occur until July at the earliest, or may even be postponed to next year or later.

Reuters surveyed 56 economists, 84% expected the central bank to remain on hold until the end of June, 23% estimated that the interest rate hike would be postponed until next year or even later, 97% believed that the central bank should not turn around and cut interest rates to respond to the trade war, and 87% believed that Japan was unlikely to fall into a recession this year.

Wu Zhuoyan, senior economist for Asia Pacific at Natixis, said that considering that inflation has undergone structural changes, which will drive up wage expectations and corporate investment, she believes that the Bank of Japan still has room to raise interest rates this year, leaving room for future monetary policy.

Wu Zhuoyan estimated that the interest rate will be raised once in the third and fourth quarters, each time by 0.25 percentage points. He also predicted that the yen would continue to be strong and might rise to 135 to the dollar in the second half of the year. He believed that Japan might not want to use a weak yen to support exports.