According to the latest Bloomberg survey on 42 economists
- 57% of respondents now see the BOJ taking action after 2019
- Previous survey in July showed only 41% expecting that
- Inflation target increasingly viewed as unattainable
- Nearly 75% of respondents see the 2% target being reached after 2022
The final points on inflation aren't too much of a surprise as the BOJ has been overly optimistic in that department for quite some time now. But the change in expectations here mainly reflects the changes by the BOJ following its monetary policy meeting last week
There's been talk of shifting the range for JGB yields - something which came up yesterday too in the minutes. The BOJ noted that those changes are mainly to reflect its goal towards achieving its inflation target but some quarters in the market are taking it to mean a possibly more hawkish BOJ. But even if they do lean in that direction, ultimately they cannot make any meaningful policy changes with regards to rates until the inflation target is reached.
Additionally, next year will also see the government introduce another sales-tax hike around October. If you recall, the last sales-tax hike back in April 2014 led to a technical recession in Japan. So, if the introduction here is not properly managed, it will only add to further delays in any plans by the BOJ to normalise monetary policy if inflation does start to tick higher next year.
That's one too many 'ifs' for my liking.
