(Bloomberg) -- Bank of Japan Governor Kazuo Ueda kept the door open to a possible interest rate increase in July, defying market skepticism over the potential for such action after the bank said it would take another big step toward quantitative tightening next month via a cut in its bond buying. 

“The reduction of bond buying and a policy rate hike are separate issues,” Ueda said Tuesday in response to questions in parliament. “There is a good chance for the policy rate to be raised, depending on data and information over the economy, inflation and financial conditions.”

One-third of BOJ watchers surveyed earlier this month by Bloomberg forecast a rate hike in July, with a narrow majority predicting the bank would cut its bond buying on June 14. In the event, authorities announced their intention to cut purchases, but said details wouldn’t be disclosed until the July 31 conclusion of the next board meeting. 

Speaking at press conference following that decision, Ueda said a rate hike in July is “of course” possible depending on data, a comment that helped ease pressure on the yen.  

Some economists weren’t convinced. A number of them subsequently pushed back their expected timing for a hike, or lowered their estimated chances of a move then, maintaining that releasing a detailed blueprint for QT and conducting a hike in the same month would be unusually aggressive.

As for the reductions in bond purchases, Ueda gave little hint as to the likely scale of the cuts Tuesday. His remark last week that the cut would be a sizable amount triggered guessing games among bond traders, and the governor didn’t offer any answers in his comments in parliament.      

BOJ watchers are parsing the governor’s remarks regarding rates in an effort to discern whether he truly means to hint at a hike, or if he’s just trying to warn currency speculators in a bid to ease pressure on the yen. As a former academic, Ueda also may be speaking purely in theoretical terms.

(Updates with more comments from parliament appearance)

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