TOKYO• • The Bank of Japan (BOJ) will keep its long-term interest rate target unchanged this year, said most of the 40 economists polled by Reuters.
But four out of 10 expect a hike, reflecting the mounting speculation as the country's economy continues to strengthen.
The economists polled between Jan 10-16 filled in a chart to indicate where they expect the BOJ's long-term rate target would be each quarter up to mid-2019.
Six out of 10 either projected it would remain at zero this year or left some future quarters blank, saying their outlook depended on who would be the new BOJ governor after Mr Haruhiko Kuroda's term ends in early April.
Mr Kuroda is widely expected to be asked to stay on.
Many economists did not foresee the BOJ unwinding its massive stimulus this year, but 16 did.
Two thought the central bank could begin cutting back in April, two said September, eight predicted October and four predicted December.
Seventeen economists expected the winding down would begin in 2019 or later.
Economists also largely thought the BOJ would continue - in its policy statements at least - to target an annual increase in its bond holdings of 80 trillion yen (S$953 billion).
But some economists said the target is a facade as the bank's actual purchases have fallen to about half that pace.
In September 2016, the BOJ adopted the novel approach to guide 10-year yield around zero per cent and keep its short-term interest rate at minus 0.1 per cent.
"We expect the BOJ will gradually raise the 10-year JGB (Japan government bond) yield target to avoid a sudden change from the current policy towards an exit," said Mr Atsushi Takeda, chief economist at Itochu Economic Research Institute.
Asked to choose up to three risks facing the Japanese economy this year, "North Korea" and "China's economic outlook" tied for top risks.
Next came "currency market movements" followed by the "tightening impact" of the US Federal Reserve Bank on financial and emerging markets.