Economists See BOJ Pausing Next Week Before December Poll

The Bank of Japan (8301) may hold off from adding to stimulus next week after it eased in September and October, as elections next month look set to increase pressure on it to do more to support an economy at risk of recession.

All 22 economists surveyed by Bloomberg News expect Governor Masaaki Shirakawa’s board to take no new action at a two-day meeting through Nov. 20. At its last meeting on Oct. 30, the BOJ increased asset purchases by 11 trillion yen ($136 billion), announced a new lending program and signed a joint statement with the government on ending deflation.

Prime Minister Yoshihiko Noda will dissolve parliament today, triggering an election on Dec. 16 that polls suggest his party will lose. Shinzo Abe, the leader of the main opposition Liberal Democratic Party, called yesterday for the bank to pursue unlimited monetary stimulus to end deflation and revive an economy that shrank last quarter at the fastest pace since 2011’s earthquake.

“The BOJ doesn’t have much time for a breather as it may have to move as early as December,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. “The bank will remain under pressure as no data indicate that its 1 percent inflation goal is in sight.”

An LDP panel today released a statement proposing the establishment of a joint private-public fund to buy foreign bonds in a bid to defeat deflation and weaken the yen, without giving further details.

The economy will contract 0.4 percent this quarter according to a separate Bloomberg News survey, which would be the third technical recession since 2008. Consumer prices fell for a fifth month in September.

The BOJ may add to stimulus at its next meeting on Dec. 19-20 if the U.S. Federal Reserve also acts at its gathering on Dec. 11-12, said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official. American monetary expansion risks weakening the dollar and driving up the yen, making Japanese exports less competitive. Sixteen economists in the survey forecast that the BOJ will add extra easing in December.

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-----Economist --------------Firm-------------------------------
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Francesca Panelli    Banca Aletti & C spa           Q1 2013
Masayuki Kichikawa   Bank of America Merril Lynch   Dec. 2012
Chotaro Morita       Barclays Capital               Dec. 2012
Ryutaro Kono         BNP Paribas                    Jan. 2013
David Rea            Capital Economics              N/A
Kiichi Murashima     Citigroup Global Markets Japan Dec. 2012
Hiromichi Shirakawa  Credit Suisse                  Dec. 2012
Hideo Kumano         Dai-Ichi-Life                  Dec. 2012
Maiko Noguchi        Daiwa Securities               Jan. 2013
Yoshimasa Maruyama   Itochu Economic Research Insti Dec. 2012
Hideki Matsumura     Japan Research Institute       Dec. 2012
Yuichi Kodama        Meiji Yasuda Life Insurance    Feb. 2013
Jun Ishii            Mitsubishi UFJ Securities      Dec. 2012
Yasunari Ueno        Mizuho Securities              Dec. 2012
Naka Matsuzawa       Nomura Securities              Dec. 2012
Takeshi Minami       Norinchukin Research Institute Dec. 2012
Junko Nishioka       RBS Securities                 Dec. 2012
Akio Akabe           Shinshu University             Dec. 2012
Mari Iwashita        SMBC Nikko Securities          Dec. 2012
Kiyoko Katahira      Societe Generale               Q1 2013
Kazuhiko Sano        Tokai Tokyo Securities         Dec. 2012
Izuru Kato           The Totan Research             Dec. 2012
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To contact the reporters on this story: Masahiro Hidaka in Tokyo at mhidaka@bloomberg.net; Isaac Aquino in Tokyo at iaquino1@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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

6:01

Nov. 16 (Bloomberg) -- Valentin Marinov, head of Group of 10 currency strategy at Citigroup Inc., discusses Bank of Japan monetary policy, its impact on the yen and expectations for the U.S. dollar. He speaks with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)