BOJ’s next move will unwind loose policy, 92% of economists say – Reuters poll


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The Bank of Japan’s (BOJ) next policy move will unwind, rather than strengthen, it’s massive monetary easing, according to more than 90% of economists polled by Reuters. The survey update also mentioned that most said the change was unlikely before the latter half of 2023.

Additional findings

Twenty-four of 26 economists in the Nov 15-25 poll said the BOJ’s next action, if any, would be “unwinding its ultra-easy monetary policy”.

However, 20 of them said the BOJ would not make the move until the second half of 2023 or later. Two respondents said the timing would be June 2023. One each chose earlier options: April and January.

The most likely option for the BOJ, were it to scale back its easing, would be tweaking the wording of its forward guidance, according to 13 of 24 respondents to a question allowing multiple selections.

Widening the controlled range of 10-year government bond yields from the current “around plus and minus 0.25 percent” was the second-most likely means, chosen by 10 respondents. Eight selected shortening of the maturity of the yield target to less than 10 years, and eight others thought the BOJ would cease to keep short-term interest rates negative.

BOJ watchers were almost evenly divided when asked about the need to revise a joint statement set in 2013 between the Japanese government and the central bank. Widely known as the policy accord, it requires the central bank to achieve its 2% inflation target “at the earliest date possible.”

Twelve BOJ watchers said it should be revised; 13 said it should not.

Among those who wanted a revision, seven called for more flexibly judging achievement of the inflation target. BOJ leaders have said “sustainable and stable” 2% inflation is needed.

One BOJ watcher calling for change wanted a lower inflation target, and another said the BOJ’s mandate should be enlarged to include targeting employment or wage rises.

Two economists in the poll said the accord should simply be abolished. “Japan’s economy is no longer in deflation” unlike when the policymakers crafted the agreement nine years ago, said Nobuyasu Atago, the chief economist at Ichiyoshi Securities.

Another question asked how long the yen would be at risk of weakening against the U.S. dollar. Twelve of 26 economists said it would until the end of this year, while eight thought the risk would last “until the first half of 2023”.

Only three said “there’s no risk of further yen weakening”, but just as many thought currency would keep facing a risk of depreciation until the second half of 2023 or later.

But economists’ forecast for Japan’s fiscal 2022 economic growth was cut to 1.7% from 1.9% in the previous poll, while the core consumer inflation rate for the same period was slightly upgraded to 2.7% from 2.6%.

Also read: USD/JPY slides towards 138.50 on mixed Japan data, pullback in yields, focus on China, Fed talks