Photographer: Tomohiro Ohsumi/Bloomberg

Economists Think the BOJ Has Finished Adding Stimulus Under Kuroda

  • Respondents to Bloomberg survey unanimous on no change Jan. 31
  • Any change under Kuroda is most likely to be in interest rates

The Bank of Japan has finished adding stimulus to the economy during the term of Governor Haruhiko Kuroda, according to almost all economists surveyed by Bloomberg. None of the 42 see any change coming at the next policy board meeting that ends Jan. 31.

There’s been a notable change from a poll before last month’s gathering of the board, with just 12 percent of analysts projecting more easing under Kuroda, versus 36 percent previously.

"The situation overseas is growing murkier, with the new Trump government and the U.K leaving the EU, and the BOJ is keeping policy on hold for the moment to wait and see," Itochu Corp.’s Atsushi Takeda wrote in the survey, which was conducted Jan. 18-23.

Click here to read the full Bloomberg survey of economists.

Forecasts for tapering of asset purchases and tightening of interest rates are also rising. Twenty-four economists forecast the BOJ will either cut its target for bond purchases, or drop it altogether. And 15 see the bank raising the target for 10-year bond yields from the current zero percent at some point before Kuroda steps down.

"As long as there isn’t extreme yen weakness or yen strength, we should see core CPI hitting 1 percent in the autumn, and there’s a possibility the BOJ will lift the long-term interest rate target from its peg of zero," Daisuke Karakama at Mizuho Bank said.

Responses on the 10-year yield target were gathered before a separate Bloomberg report on Tuesday showed officials at the BOJ would rather be late than early in raising it. This is even if consumer price gains reach 1 percent later this year, according to people familiar with the central bank’s discussions.

The BOJ forecasts inflation will be 1.5 percent in the fiscal year starting in April, still below its target of 2 percent.

"I think that Governor Kuroda will still continue to place focus on leading the yen lower, and I think it’ll be hard for them to raise the 10-year yield target," Totan Research President Izuru Kato said in the survey. "However, if Japanese core CPI was to rise to 1 percent or above, then the BOJ might raise the 10-year target, in a ‘behind-the-curve’ fashion," he said.

The board will consider any changes to policy and also provide updated forecasts for inflation and gross domestic product growth at the two-day meeting next week.

— With assistance by Hannah Dormido, Dru Ann Love, and Adrian Leung

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