07:00 AM EDT, 07/29/2024 (MT Newswires) -- The Bank of Japan's (BoJ) policy announcement -- due out at 10:30 p.m. ET Tuesday -- is more uncertain than the United States Federal Reserve's one of Wednesday, said Daiwa Capital Markets.

In part due to the yen's (JPY) marked appreciation since the ministry of finance's (MoF) foreign exchange intervention earlier this month, the softness of consumption and recent moderation in underlying inflation pressures, Daiwa suspects the BoJ will keep the interest rate on excess reserves unchanged at 0.1%.

However, the BoJ will unveil its plans for quantitative tightening (QT) over the next two years, stated the bank. In keeping with Governor Kazuo Ueda's relatively cautious approach to policymaking, Daiwa expects the BoJ's monthly average pace of gross Japanese government bond (JGB) purchases to be halved over the next two years from the current rate of six trillion yen per month, perhaps with an initial reduction of just 500 billion yen in monthly purchases over the coming quarter.

The Policy Board will also publish updated economic projections, added the bank.

In terms of economic data, Japan's industrial production (IP) figures (at 7:50 p.m. ET on Tuesday) are expected to report a notable decline in June (4.5% m/m contraction) as further temporary factory shutdowns on safety concerns impacted the autos sector. This notwithstanding, manufacturing output will still post a decline increase of around 2.5% three-month/three-month, although reversing only part of the 5.1% slump in Q1.

Meanwhile, June labor market and retail sales numbers are also due (overnight Monday and overnight Tuesday respectively).