• Survey shows 27.5% of economists expect more easing on June 16
  • Chances rise to 55% for July 29, according to Bloomberg poll

Most economists think that the Bank of Japan is getting close to expanding its record monetary stimulus program. What they can’t agree on is whether Governor Haruhiko Kuroda will lead his policy board to take action at a meeting this week, or when they gather again next month.

A majority of 55 percent forecast more easing on July 29, while 27.5 percent project a change as soon as June 16, according to a Bloomberg survey of 40 economists conducted June 6-10. When it does adjust policy, increased purchases of exchange-traded funds and a deeper cut to negative interest rates are seen as the two most likely measures.

Just under half expect a boost to the government-bond purchase program that’s the core of the current easing program.

Click here to view the full survey for this week’s BOJ meeting

Economic data since the last policy meeting on April 28 indicate the economy is struggling, with the most recent reading of gross domestic product showing that business investment contracted while private spending was weak. Consumer prices are falling again, leaving Kuroda far from his 2 percent inflation target.

Confirming just how fragile the outlook is, Prime Minister Shinzo Abe announced this month that a sales-tax hike planned for next year will be delayed, even as government debt piles up.

Inflation Target

Almost all of the economists who responded to the Bloomberg survey said Kuroda is unrealistic in his view that the inflation target will be reached during the fiscal year starting in April 2017.

While most economists project more stimulus is on the way, one said there will be no further easing and two estimated it won’t come until January next year or later.

Key ingredients of the BOJ’s program are an expansion of the monetary base at an annual pace of 80 trillion yen ($748 billion) a year, mostly through government-bond purchases, and a newly introduced negative interest rate. The charge is currently minus 0.1 percent and is applied to some of the funds that financial institutions park at the central bank.

External Risks

The risk of Britain voting to leave the European Union later this month is adding to the external risks to Japan’s economy, which is already facing headwinds this year from an appreciation in the yen that undercuts the competitiveness of exporters.

With an upper-house election approaching this summer, Abe has said the government will compile a fiscal spending package to help support the economy.

Meanwhile, many lawmakers have expressed concern about the impact of negative interest rates on consumer sentiment, reducing any political pressure on the BOJ to do more in this area.

Nobuyuki Nakahara, an adviser to the prime minister and a former central bank board member, said in an interview on June 10 that the target for government bond purchases should be boosted to 100 trillion yen a year, while any cut to the negative rate should be avoided for now.

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