The Bank of Japan is as hard to predict as ever. Just over half of economists surveyed by Bloomberg forecast an expansion of monetary stimulus at the conclusion of the BOJ’s policy review next week. Others point to November, December and next year.
A small minority still expect no change in the foreseeable future. Among those who do see action this month or later, 53 percent project a deeper cut to the negative rate placed on a portion of commercial banks’ reserves at the BOJ. Thirty-five percent are looking for more purchases of Japanese government bonds, with some suggesting the BOJ may shift to a target range to give it more flexibility.
"The BOJ insists that it still has many tools available. But the costs of using these tools are rising and the benefits are diminishing, especially for its huge asset purchases," said Izuru Kato, chief economist at Totan Research.
"Deepening negative rates has enormous costs too but practically, that's probably the only usable tool left."
The BOJ is also keen to dispel market concerns it is running out of ammunition to prevent unwelcome yen rises from hurting Japan's exports. The dollar may weaken against the yen if the Fed sends out a dovish message on its future rate hike path at its policy announcement due hours after the BOJ's, analysts say.
Sources say the board may consider deepening negative rates to show its determination to maintain an ultra-easy policy bias, though analysts doubt whether that will do much to boost growth.
Reference : Bloomberg, Reuters
Read more : http://www.bloomberg.com/
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