Bank of Japan to raise interest rates three times more than market expected – Pimco’s Gupta – Bloomberg

Sachin Gupta, portfolio manager at Pacific Investment Management (PIMCO), said on the 25th that the Bank of Japan, which raised interest rates for the first time in 17 years last month, may raise interest rates three times more than market expectations. I showed my point of view.

“From our perspective, this is more like the beginning of an adjustment in Japan’s monetary policy than the end,” Mr. While market participants are predicting an additional rate hike of around 0.5 percentage points within this year, “We think there is a possibility that the rate could go a little further, perhaps to 0.75 percent.”

Mr. Gupta, who manages more than $40 billion (approximately 6.22 trillion yen) at Pimco and is underweight Japanese government bonds, predicts the Bank of Japan’s tightening cycle could extend into 2025.

“Looking further ahead, I believe this is the beginning of a tightening cycle in Japan,” Mr. Gupta said in an interview in Hong Kong. He said Japan’s path to tightening would be different from Europe, which has also adopted negative interest rate policies in the past, and that given Japan’s historical interest rates, this is “a very important shift in monetary policy.” Told.

Although Mr. Gupta has a “low allocation” to Japanese government bonds, he is more bullish on government bonds from other developed countries. He favors British and European government bonds, as well as Canadian, Australian and New Zealand government bonds.

“Growth in developed countries outside of the United States is much weaker,” he said, adding that this provides further evidence for easing measures in many of these major markets this year. In the United States, on the other hand, the government expressed a cautious stance, citing the risk that policy interest rates would remain high for a longer period of time against the backdrop of a strong economy.

“Growth remains resilient, so the U.S. will be towards the end of the queue,” he said, adding that “on a relative basis, other durations become more attractive globally.” .

Original title: Pimco Says BOJ May Raise Rates Higher Than Markets Expect (excerpt)

(Updated with Mr.Gupta’s interview remarks)