08:43 AM EDT, 07/29/2024 (MT Newswires) -- MUFG said it has been calling for the Bank of Japan (BoJ) to hike rates further by 15bps at this week's policy meeting supported by the improving inflation outlook.

The BoJ is slated to release its policy statement on Tuesday, at 10:30 p.m. ET.

Ahead of the policy meeting, the BoJ has come under more pressure from leading Japanese politicians to tighten policy, stated MUFG. The LDP leadership election is scheduled to take place in September which has argued in favor of hiking rates this week week.

However, there has been no clear indication from the BoJ that it's planning to hike rates this week highlighting that it is far from a done deal. According to Bloomberg, some BoJ officials favored delaying hiking rates given concerns over recent weakness in consumer spending, according to MUFG.

At the same time, the BoJ will outline plans to slow down the pace of Japanese government bond (JGB) purchases, added the bank. The BoJ has indicated that is considering halving the current pace of monthly purchases from around six trillion yen over a couple of years, although that could be done in a number of steps.