Close on the heels of the Federal Reserve raising its key rates by 25 basis points, the Bank of Japan would be concluding its meeting on Friday to take stock of the economic situation and come out with their opinion. In a nutshell, the Central Bank would unlikely to extend its monetary stimulus to boost the economic activities in the country. In fact, some of the economists believe that BOJ might wait to see whether the recent economic growth signs can take forward to a sustainable level.
Survey among Economic Analysts
Before FED increased its rates, Bloomberg did a survey of economic experts. The poll indicated that 48% of the respondents were not expecting any more stimuli from the Japan’s Central Bank. That was two percentage points more than the previous survey conducted in November. There was only one analyst who is predicting further easing of monetary stimulus in the two-day meeting that will conclude on Friday.
However, half of the respondents expect BOJ to relax its policy before April. Following the October 30 board meeting, analysts have changed their opinion on further easing of stimulus. During the meeting, the Central Bank has extended the time-frame to reach its targeted level of 2% for inflation and maintained its asset purchases without any change. At that point of time, 67% of the respondents were forecasting additional stimulus till April next year.
Favorable Factors For Policy Makers
In the current year, the BOJ has not boosted the stimulus while the recent weeks witnessed favorable factors for its policy markets. While economists were expecting a contraction in the Japanese economy, its economy advanced in the third quarter thus avoiding a recession. Also, capital spending witnessed a surge in the September quarter. Its Tankan survey indicated that business confidence was stagnant in the current month.
BOJ has blamed the weak oil prices for missing its target on inflation. The Central Bank’s Governor, Haruhiko Kuroda, is now betting on the corporate to hike investments, as well as, wages to encourage economy in the country.
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