In the Nov. 15-25 poll, 24 of 26 economists polled said the BOJ’s next policy move, if any, would be to “unwind its ultra-loose monetary policy“. However, 20 of them said the BOJ would not act until the second half of 2023 or later. Two other respondents said it would be June 2023. The remaining two respondents both chose an earlier date: April and January.
In a multiple-choice question, 13 of 24 economists said the most likely move if the BOJ were to exit its easing would be to change the wording of its forward guidance, with 10 saying it would be to widen the 10-year yield 8 people said that it is to shorten the target yield period to less than 10 years, and 8 people think that the Bank of Japan will stop keeping short-term interest rates negative.
The BOJ watchers were almost evenly split when asked whether a 2013 joint statement between the Japanese government and the BOJ needed to be revised. Twelve economists said the agreement should be revised, while 13 said it should not. The 2013 joint statement between the Japanese government and the BOJ, widely known as a policy agreement, called for the central bank to achieve its 2 percent inflation target “at the earliest opportunity.”
Among those economists who wanted to revise the agreement, seven called for a more flexible way of judging whether inflation is on target. The BOJ governor has previously said that the 2% inflation target needs to be achieved “sustainably and stably”.
One economist wanted a lower inflation target, while another said the BOJ should broaden its mandate to include employment or wage increases in its policy goals.
Two other economists said the agreement should be scrapped outright. Unlike when the deal was struck nine years ago, “the Japanese economy is no longer in deflation,” said Nobuyasu Atago, chief economist at Ilkichi Securities.
Asked how long the risk of yen weakness against the dollar lasted, 12 of 26 economists said the risk would last until the end of the year, while eight said the risk would persist “until 2023.” the first half of the year”. Only 3 people think that “there is no risk of further weakening of the yen”, but the same number of people think that in the second half of 2023 or later, the yen will continue to face the risk of depreciation.
In addition, in the latest survey, economists lowered their forecast for Japan’s economic growth in fiscal 2022 to 1.7% from 1.9% in the previous survey, and the core inflation forecast was also slightly raised to 2.7% from 2.6%.
