Around 11:00 on July 31st (next Wednesday), the Bank of Japan will hold an interest rate decision. A survey shows that over three-quarters of analysts believe that the Bank of Japan will not raise interest rates at its policy meeting at the end of July, as it hopes to boost weak economic growth.

Most interviewed economists believe that Japan will not raise interest rates in July

On the contrary, the Bank of Japan may prioritize reducing its bond buying program, although it may have missed the window of interest rate hikes before the Federal Reserve cuts interest rates. At present, the market generally expects the Federal Reserve to start cutting interest rates in September.

The survey results reflect the dilemma faced by the Bank of Japan, which is that raising interest rates too quickly to normalize policies may suppress the fragile economic recovery, although it also faces pressure to prevent a significant decline in the yen.

A survey conducted from July 10th to 18th showed that among the 37 analysts who provided forecasts for the specific month when the Bank of Japan will next adjust interest rates, 28 said they will not do so this month. This proportion is higher than the survey result of 61% last month.

Since the Bank of Japan raised its benchmark interest rate from -0.1% to 0% -0.1% in March, there has been no consensus on the timing of its next action.

In the latest opinion poll, the most popular choice for interest rate hikes is October, accounting for 43%, with 16 out of 37 respondents holding this view, followed by September (30%) and July (24%). In last month's survey, economists had a 39% opinion on July and October respectively.

Oanda analyst Kelvin Wong said, "The potential rise in Japan's core consumer price index led by the producer price index may increase the possibility of the Bank of Japan raising interest rates in September

Considering that consumption remains sluggish and businesses are unwilling to pass on prices to consumers, the Bank of Japan may hastily raise interest rates while reducing government bond purchases to avoid the risks of price stability and economic downturn, "said Harumi Taguchi, Chief Economist for Global Market Intelligence at Standard&Poor's

Sompo Institute Plus senior economist Masato Koike said that the Bank of Japan may also hesitate to raise interest rates before the ruling Liberal Democratic Party's presidential election in September.

Due to concerns about the weak yen driving up import costs, Bank of Japan Governor Kazuo Ueda has previously stated that he does not rule out the possibility of a rate hike this month. Since the beginning of this year, the Japanese yen has fallen by about 10%.

Mitsubishi UFJ: If interest rates are not raised, the yen may fall back to recent lows

Mitsubishi UFJ analysis suggests that if the Bank of Japan maintains interest rates unchanged at its meeting on July 31, the yen may fall as Japanese politicians become increasingly uneasy about the slow pace of monetary policy normalization.

Lee Hardman, an analyst at the bank, said in a report that the weakening of the yen and the timing of the Liberal Democratic Party's leadership election in September are favorable for raising interest rates next week, rather than waiting until later this year. It is expected that the Bank of Japan will raise interest rates by 15 basis points.

Hardman said, "If the Bank of Japan doesn't raise interest rates next week as we expected, the yen is likely to quickly fall back to its recent low, forcing Japan to intervene again

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