Bank of Japan seen holding off more stimulus for now unless yen rises sharply: Reuters poll

Tue Oct 11, 2016 1:21am EDT
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By Kaori Kaneko

TOKYO (Reuters) - The Bank of Japan is expected to wait until next year before easing policy further unless any sharp spikes in the yen undermine the economy significantly in the meantime, a Reuters poll found.

Last month the central bank switched the focus of its stimulus program to targeting market interest rates after years of massive asset buying failed to push up inflation.

About 70 percent of the analysts who answered an extra question said the BOJ would add more stimulus at its January meeting or later, while a handful of analysts predicted the central bank would ease further at its Oct. 30-Nov. 1 meeting when it releases its long-term growth and inflation outlook.

But several analysts said the central bank would keep to its current pace of stimulus, saying they had no specific forecast of when it would next take action.

"Our main scenario is that the BOJ will stand pat if the yen stays at the current level," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

"But there is a chance that the BOJ will lower interest rates further if the yen rises to around 95 yen per dollar in case the Federal Reserve decides not to raise interest rates this year."

The yen was trading at around 103.90 yen per dollar JPY=EBS on Tuesday, after hitting a one-month low beyond 104 yen last week.

Tokuda said the BOJ faces less pressure to implement more stimulus after shifting its focus to interest rates and dropping the two-year timeframe to hit its 2 percent inflation target. Instead, it now wants to meet the target as early as possible.   Continued...

Men walk toward the Bank of Japan (BOJ) building in Tokyo, Japan, September 21, 2016.  REUTERS/Toru Hanai