BOJ to boost stimulus later this year? Consensus is shifting.

Author: Eamonn Sheridan | Category: News
Bloomberg with an article in the views inside the Bank of Japan & the changing policy landscape
The Bank of Japan is projected to boost stimulus later this year, even amid signs of a stronger economy and an emergence of concern that the yen has fallen too far, a survey of economists by Bloomberg News shows.
The latest view from some officials inside the BOJ is that further monetary easing to shore up inflation would be a counterproductive step for now, people familiar with the talks have told Bloomberg
  • Policy makers are concerned it could trigger declines in the yen that damage consumer confidence
A weak yen is an obstacle to an expansion of monetary easing, according to seven of 24 economists in a Bloomberg News survey Friday
  •  "The government is strengthening its stance for not allowing the yen to fall further as they want to spread the benefits of cheaper oil prices before nationwide local elections in April," said Kyohei Morita, an economist at Barclays
  • "It's unavoidable for the BOJ to soften its firm stance to achieve its price target in or around fiscal 2015."

Junko Nishioka at Sumitomo Mitsui Banking forecasts the BOJ will hold at least through the end of the year

"I had thought the BOJ considered a weak yen as positive for the economy, ...  But with the report, I began to think that BOJ officials are starting to put more weight on the negative aspects of a weak currency, such as damage to sentiment and higher costs of imports
The BOJ's key gauge of inflation slowed to 0.5 percent in December (just a quarter of the 2% target
  • That's a key reason why 16 of the economists in the survey still expect the BOJ to increase easing
  • Eleven of them forecast action by the end of October. Of those, two predict the BOJ will move in April, four in July, and five in October
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