Economists See BOJ Easing Next Week as Pressure on Bank Grows

The Bank of Japan (8301) will probably take new easing steps next week, a survey of economists showed, as pressure builds on the central bank to do more to end deflation and revive the economy.

All but one of 27 economists surveyed by Bloomberg News expect the central bank to add to stimulus for the second time in two months at a policy board meeting on Oct. 30. At its last meeting that ended Oct. 5, the bank held off from more easing after expanding its asset-purchase program in September.

Price falls have continued since May and the BOJ will probably predict it will miss its 1 percent inflation goal in the next two fiscal years, according to people familiar with the matter. That comes as slowing overseas demand and the strong yen weigh on exporters, with Citigroup Inc. and Morgan Stanley predicting that the economy will shrink in the third and fourth quarters of 2012.

“The risk of recession is rising,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. “I think the bank will expand its asset purchase funds by 15 trillion yen but it will depend on developments in currency markets and the global economy right before the meeting.”

Fifteen analysts expect the BOJ to add 10 trillion yen to its asset-purchase funds, while four economists see it adding as much as 20 trillion yen.

Expand Asset Program:

Economist Expansion

Jun Ishii Y10T Mitsubishi UFJ Morgan Stanley Securities Co.

Masaaki Kanno Y10T JPMorgan Securities Japan Co.

Hideo Kumano Y10T Dai-Ichi Life Research Institute

Chotaro Morita Y10T Barclays Plc

Francesca Panelli Y10T Banca Aletti & Co.

Akiyoshi Takumori Y10T Sumitomo Mitsui Asset Management

Junko Nishioka Y10T RBS Securities Japan Ltd.

Matthew Circosta Y10T Moody’s Analytics

Hideki Matsumura Y10T Japan Research Institute

Yasuhide Yajima Y10T Nli Research Institute

Daiju Aoki Y10T UBS Securities Japan Co.

Takeshi Minami Y10T Norinchukin Research Institute

Yoshimasa Maruyama Y10T Itochu Corp. (8001)

Akio Makabe Y10T Shinshu University

Yuichi Kodama Y10T Meiji Yasuda Life Insurance Co.

Mari Iwashita Y10T-Y15T SMBC Nikko Securities Inc.

Yasunari Ueno Y15T Mizuho Securities Co.

Izuru Kato Y10T-Y15T Totan Research Co.

Kazuhiko Sano Y20T Tokai Tokyo Financial Holdings

Hiromichi Shirakawa Y20T Credit Suisse AG

Naka Matsuzawa Y10.5T Nomura Securities Co.

Kiichi Murashima Y10T-Y20T Citigroup Inc.

Masayuki Kichikawa Y10T-Y20T Bank of America Merrill Lynch

Takeshi Yamaguchi Y15.8T Morgan Stanley MUFG Securities Co.

The following economist forecast easing without specifying an amount: Ryutaro Kono BNP Paribas SA

The following economist forecast an expansion of the central bank's Growth-Support Funding Facility: David Rea Capital Economics

The following economist said: Y10T per treasury bills and government bonds: Emre Tiftik Institute of International Finance

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net