By Toru Fujioka and Masahiro Hidaka
Majority still forecast tightening to come, but at later date
Survey indicates no change at policy meeting this week
An increasing number of economists see additional stimulus as the Bank of Japan’s next policy step, while they are unanimous in forecasting no change at this week’s board meeting.
Some 37 percent of 46 economists surveyed by Bloomberg this month forecast the next policy change will be additional easing, a jump from 18 percent in January. All of them expect the BOJ to maintain its current policy settings when a two-day meeting ends Friday, according to the March 4-7 poll.
“The BOJ can’t ignore clear dovish turns by the Federal Reserve and the European Central Bank,” said Hiroaki Muto, chief economist at Tokai Tokyo Research Center, who switched his projection to easing from tightening this month. Muto said the BOJ is likely to be forced to take action to prevent the yen from strengthening around midyear as clouds gather over the global economy.
Most of the surveyed economists still expect the BOJ to tighten policy, though they have been pushing back the timing for this change. Only one sees it coming this year, compared with 14 in a survey done in December.
Since then the Federal Reserve has made clear it is no rush to raise interest rates, a message Fed chair Jerome Powell reiterated Sunday. The European Central Bank last week announced a new round of loans to banks and promised interest rates won’t be lifted from record lows until 2020.
Any further easing or strongly dovish signals by major central banks could intensify pressure for the yen to rise. Governor Haruhiko Kuroda last month said that the BOJ would have to consider bolstering stimulus if a stronger yen threatened the path toward its 2 percent inflation target.
The BOJ is likely to discuss downgrading its assessment of exports, production and overseas economies this week, according to people familiar with the matter.
Exports dropped the most since 2016 in January, feeding into weak production, both important driving forces of the economy.
— With assistance by Cynthia Li