Japan Inc. sees no need for 2 percent inflation or more easing: Reuters poll

Sun Feb 22, 2015 6:08pm EST
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By Tetsushi Kajimoto

TOKYO (Reuters) - Japan Inc sees no need for an aggressive pursuit of a 2 percent inflation goal or additional monetary easing, a Reuters poll showed - a stance that supports the central bank's recent softer tone on achieving its consumer price target in the near future.

Analysts, however, expect the Bank of Japan to embark on more stimulus later this year, topping up its latest round launched in October, to support economic growth and ensure rises in inflation, a separate Reuters poll showed this month.

Seeking to wrench the country out of nearly two decades of deflation, BOJ Governor Haruhiko Kuroda unleashed an unprecedented burst of monetary stimulus in April 2013, saying the aim was to achieve 2 percent inflation in roughly two years. But last month he declared the timeframe was not set in stone and noted that a steep slide in oil prices had derailed earlier expectations.

The Reuters Corporate Survey, conducted Feb. 2-17, showed that while most firms want consumer inflation to be higher than the current 0.5 percent, four-fifths were content with levels of less than 2 percent.

Just over 70 percent of companies said they saw no need for additional easing despite the plunge in oil prices - a figure consistent with previous survey results in recent months.

Bold monetary stimulus over the past two years has weakened the yen substantially and many respondents said any further softening would drive up import costs.

"Japanese firms appear to believe more monetary stimulus would do more harm than good as it could raise volatility in markets, disrupting their business," said Takuji Okubo, chief economist at Japan Macro Advisors, who reviewed the poll results.

"It's true that Japanese exporters are benefiting from a weak yen caused by monetary easing, but many companies seem to be content with current exchange rate levels."   Continued...

Bank of Japan (BOJ) Governor Haruhiko Kuroda gestures during a news conference at the BOJ headquarters in Tokyo, February 18, 2015. REUTERS/Thomas Peter