BoJ seen easing further as the next policy move – Reuters poll

According to the latest Reuters poll, a small but growing contingent of economists believes that the Bank of Japan (BoJ) will ease its ultra-loose monetary policy further amid mounting risks to the Japanese economic growth and inflation outlook.

The latest Reuters poll was taken Feb 7-20.

Key Findings:

“Most economists polled by Reuters — 29 of 38 — still expect the BOJ’s next step would be to scale back its massive stimulus program.

But nine analysts — up from five in last month’s poll — said the central bank would instead boost stimulus with steps such as buying even more assets to flood the financial system with cash and tweaking the wording in forward guidance.

Nearly all economists polled — 33 of 36 — said they disagreed with the BOJ’s insistence that inflation was maintaining momentum toward reaching 2 percent.

Many economists who forecast the central bank will scale back stimulus said that will happen sometime in 2020 or later.

The median in the poll projected the nationwide core consumer price index, which includes oil products but not fresh food costs, would rise 0.8 percent in both fiscal 2019, which starts in April, and fiscal 2020.

Economists projected Japan’s economy will contract 2.5 percent in the October-December quarter due to the sales tax hike but eke out 0.7 percent growth in all of fiscal 2019.

For the following fiscal year, growth is expected to slow to 0.5 percent.”