The Central Bank of Japan will not change the key parameters of its monetary policy at a meeting on June 15-16, most experts predict. Thus, the deposit rate will remain at minus 0.1%, while the increase of the monetary base is expected to be 80 trillion yen ($ 703 billion).
Only 5 of the 27 economists polled by Reuters expect any action from the central bank at the upcoming meeting, while 18 of the respondents believe that the Central Bank may extend incentives in July.
Analysts of Deutsche Bank (DE: DBKGn) believe that the uncertainty preceding the referendum on Britain's membership in the EU will force the Central Bank to postpone the increase in incentives. The referendum is planned on June 23 and, as shown in the four most recent public opinion polls, the percentage of supporters of Brexit exceeds the percentage of Britons who want to stay in the EU.
DB experts still believe that in July-September the Bank of Japan will cut rates on deposits to minus 0.2%.
Meanwhile, the negative interest rate on deposits, introduced in January, drew criticism even from some members of the bank's Board of Governors. Thus, Takehiro Sato, a former economist at Morgan Stanley (NYSE: MS), said earlier that the introduction of negative interest rate carries more harm than good.
An additional obstacle to the expansion of incentives can be quite strong data on the growth of the Japanese economy in the first quarter of this year. As reported, the estimate of the growth of Japan's GDP in January-March was increased to 1.9% from the earlier 1.7% prior.
The experts of Nomura believe that the July increase in incentives seems more likely. In particular, it is namely in July when the Central Bank will publish updated forecasts of economic growth and consumer prices in the country, which are likely to be reduced, and then the application of the new incentives would be more appropriate, they believe.