TOKYO (Reuters) – The Bank of Japan is likely to focus on measures to make its purchase of risky assets, such as exchange-traded funds (ETFs), more flexible as the economy comes under increasing pressure. growth from a spike in COVID-19 infections, a Reuters poll found.
Polled analysts also revised their economic forecast for the fiscal year that ended in March in anticipation of a recent recovery of tooth – growing coronavirus diseases.
Economic activity could halt the world’s third-largest economy from pandemic loops and the BOJ may need to look at more efficient ways to meet its 2% inflation target as regenerative diseases take over. highly motivated to keep it longer, analysts said.
The central bank said last month that its control over yield curve and quantitative easing policies would be examined to look for ways to make them “more efficient and sustainable”. Its conclusions will be published in March while new GDP estimates are presented at their policy meeting on January 20-21.
“The BOJ may be considering corrective corrections caused by its policy that could be an obstacle to maintaining the current framework during the term of the year. Governor (Haruhiko) Kuroda will end in early 2023, ”said Izuru Kato, chief economist at Totan Research.
Asked what steps the BOJ would take when the central bank announces its findings in March, 31 economists said the central bank would “make the ETF purchase, J-REIT more flexible,” he pointed out. the poll held between January 7-18.
Eight analysts said the BOJ would review their tripartite investment rate system that only sends negative interest rates to additional bank reserves and two said the central bank would change the 10-year bond yield target to other times.
The question allowed for several answers.
The central bank will talk about ways to scale back a controversial program that buys large sums of trade funds without keeping a market afraid of a withdrawal from an ultra-thin policy, sources have said to Reuters.
STATEMENT OF REFORM
Japan extended a state of emergency it declared for the Tokyo area earlier this month to seven other prefectures last Wednesday amid a steady rise in COVID-19 cases.
Many analysts expect the latest measures to do less damage to the economy than the tougher and broader loopholes imposed in April and May last year.
In the poll, released ahead of the government’s decision to extend the state of emergency outside the Tokyo area, analysts expected the economy to hold 2.4% in January-March. The census had forecast a 2.1% expansion in December.
For the fiscal year ending March, the economy was expected to shrink 5.5%, the poll found, slightly weaker than last month’s 5.3% shortfall.
The economy was expected to grow 3.3% in the fiscal year beginning in April, starting with 4.1% growth in the April-June quarter, the census showed.
“Restrictions under the renewed emergency status are relatively moderate, so it could take a long time for disease numbers to fall,” said Hiroshi Namioka, strategist and asset manager at T&D Asset Management. “Downward pressure on prices could strengthen. ”
Consumer base prices, which keep volatile fresh food prices volatile, will fall 0.5% this fiscal year before rising to 0.2% next fiscal year, the poll found.
Economists have been divided on the side the BOJ moves when it changes policy again.
Twenty-one of 39 analysts predict the BOJ would reduce incentives, and 18 said it would increase financial support.
Sources have told Reuters that the BOJ was likely to slightly revise next fiscal year ‘s economic forecast and stop stimulus expansion at their policy meeting on January 20-21.
(For other stories from the Reuters global economic account 🙂
Voting by Shaloo Shrivastava, Editing by Leika Kihara and Jacqueline Wong