Photographer: Tomohiro Ohsumi/Bloomberg


BOJ Watchers Push Back Exit Forecasts

Fewer economists see any chance of monetary tightening this year by the Bank of Japan after Haruhiko Kuroda’s renomination as governor and his comments on when the BOJ is likely to start thinking about exit. None forecast any change at this week’s policy meeting.

While the vast majority of 49 economists surveyed by Bloomberg think the central bank is inching closer toward the day it will start winding back its monetary stimulus program, less than one-third of them think it will come this year. That’s down from about half in Bloomberg’s last poll in January.

The Waiting Game

More economists have pushed back forecasts for BOJ tightening until next year

Source: Bloomberg survey of economists

While the reappointment of Kuroda was widely expected, many observers were surprised by the clarity of his comments to parliament on March 2 about exit timing. Kuroda said that sometime around the fiscal year starting in April 2019 the BOJ would probably be considering the details of any wind down of stimulus. His comments came before the Feb. 27-March 5 survey closed.

During further questioning by lawmakers on Tuesday, Kuroda said he didn’t mean to indicate that the BOJ would immediately make a change in fiscal 2019, but had intended to convey that the policy board may be discussing how to move forward with exit at that point.

Even so, the comments reinforce the view that the end of the easy money era which spanned the global economy for the last decade is ending, even if Japan still has a way to go.

The Federal Reserve, Bank of Canada and Bank of England have already raised interest rates and may do so again soon, while the European Central Bank is debating how soon to end its own bond-buying. China’s central bank is sticking to what it describes as neutral policy settings and is ratcheting up money market rates to cool the pace of borrowing. Bloomberg Economics estimates net asset purchases by the main central banks will dwindle to around zero around the start of 2019.

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