7 Aug 2013
BoJ expected to expand easing by next year - Bloomberg survey
FXstreet.com (Barcelona) - The Bank of Japan will extend its easing practices by June 2014 as a 2% inflation mandate continues to be an ambitious target hard to meet, according to a survey of economists by Bloomberg News.
On the survey, 20 out of 26 economists project more aggressive easing by the BoJ before June 2014, with the latest core CPI (excluding fresh food) still showing a modest 0.4% rise in June.
On the easing timing, however, there are discrepancies as to when it may happen, with 5 predicting stimulus in the October-December period; 6 in Q1 2014; and 9 in Q2 2014. Meanwhile, 5 forecast easing beyond July 2014.
As cited by Bloomberg, quoting Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo: "It’ll be really difficult to achieve 2 percent inflation in two years. A sales tax increase will undoubtedly slow the Japanese economy and inflation momentum.”
The most dovish views on the survey are in line with an article from RBS Strategist Greg Gibbs published earlier today, who is looking for limited downside in USD/JPY, noting "the prospect of a consumption tax hike and weakness in Asian economies is weighing on sentiment. This may soon force the BoJ towards more monetary policy easing."
In view of Nomura Strategist Yujiro Goto: "Governor Kuroda’s clear stance in support of a consumption tax hike implies that the Bank is willing to ease again if such a tax hike next year slows the economy significantly, limiting downside risk of USDJPY in the medium term. On the other hand, if the government postpones the tax hike, the Bank may become more reluctant to accelerate JGB purchases in case the downside risk to the economy grows or materializes."
On the survey, 20 out of 26 economists project more aggressive easing by the BoJ before June 2014, with the latest core CPI (excluding fresh food) still showing a modest 0.4% rise in June.
On the easing timing, however, there are discrepancies as to when it may happen, with 5 predicting stimulus in the October-December period; 6 in Q1 2014; and 9 in Q2 2014. Meanwhile, 5 forecast easing beyond July 2014.
As cited by Bloomberg, quoting Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo: "It’ll be really difficult to achieve 2 percent inflation in two years. A sales tax increase will undoubtedly slow the Japanese economy and inflation momentum.”
The most dovish views on the survey are in line with an article from RBS Strategist Greg Gibbs published earlier today, who is looking for limited downside in USD/JPY, noting "the prospect of a consumption tax hike and weakness in Asian economies is weighing on sentiment. This may soon force the BoJ towards more monetary policy easing."
In view of Nomura Strategist Yujiro Goto: "Governor Kuroda’s clear stance in support of a consumption tax hike implies that the Bank is willing to ease again if such a tax hike next year slows the economy significantly, limiting downside risk of USDJPY in the medium term. On the other hand, if the government postpones the tax hike, the Bank may become more reluctant to accelerate JGB purchases in case the downside risk to the economy grows or materializes."