But although markets have recently awakened to the possibility that the central bank may stop pushing interest rates virtually to zero as soon as July 17, there is no consensus among BoJ-watchers, an informal survey found on Wednesday. Seven of the 18 experts canvassed expect the bank to end zero rates by September, but the same number see the BoJ on hold into next year, while four see a rate hike in the October-December quarter.

Those seeing a move as early as next month say the BoJ will seize on the expected improvements in its quarterly "tankan" survey of business sentiment and capital spending on Tuesday. Others say the bank will wait to see April-June gross domestic product (GDP) data due out in September to confirm a recovery in the world's second-biggest economy. The most bearish BoJ watchers say that despite the BoJ's increasingly public impatience with the unprecedented zero-rate policy, the economy remains too fragile for the shock of a rate hike. Earlier on Wednesday, the BoJ Policy Board voted by undisclosed majority to stick with the zero-rate policy. "I think the chances are very big that the BoJ will change its interest-rate policy - leave the zero interest rate policy - at the earliest in July, or else a couple of months from now," Kagehide Kaku told Reuters Television on Wednesday.

US investment adviser Richard Medley, in Tokyo to meet senior BoJ and Government officials earlier this month, also predicted the bank would move by September. "July is definitely in play, it's definitely a real option, given expectations of a stronger tankan," New York-based Medley Global Advisors' head, Medley, said. Economists surveyed by Reuters expect the tankan to show a sixth across-the-board improvement in sentiment and spending plans. The sentiment index for large manufacturers was expected to improve by five points to minus four, with companies in the tankan expected to forecast a September reading of zero - an even balance of positive and negative views.

For capital spending at small firms - an area explicitly flagged by policymakers - the survey forecast 2000/01 spending plans falling 2.4 per cent, better than the 6.8 per cent decline reported in the March tankan. But many BoJ-watchers say that the BoJ, in its warnings that the conditions were falling in place to end zero rates, is trying to lay the groundwork well in advance for a rate hike through the bank's self-styled "dialogue with the markets".

-- (Reuters)