The Bank of Japan (8301) may hold off from adding to stimulus next week after it eased in September and October, as elections next month look set to increase pressure on it to do more to support an economy at risk of recession.
All 22 economists surveyed by Bloomberg News expect Governor Masaaki Shirakawa’s board to take no new action at a two-day meeting through Nov. 20. At its last meeting on Oct. 30, the BOJ increased asset purchases by 11 trillion yen ($136 billion), announced a new lending program and signed a joint statement with the government on ending deflation.
Prime Minister Yoshihiko Noda will dissolve parliament today, triggering an election on Dec. 16 that polls suggest his party will lose. Shinzo Abe, the leader of the main opposition Liberal Democratic Party, called yesterday for the bank to pursue unlimited monetary stimulus to end deflation and revive an economy that shrank last quarter at the fastest pace since 2011’s earthquake.
“The BOJ doesn’t have much time for a breather as it may have to move as early as December,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. “The bank will remain under pressure as no data indicate that its 1 percent inflation goal is in sight.”
An LDP panel today released a statement proposing the establishment of a joint private-public fund to buy foreign bonds in a bid to defeat deflation and weaken the yen, without giving further details.
The economy will contract 0.4 percent this quarter according to a separate Bloomberg News survey, which would be the third technical recession since 2008. Consumer prices fell for a fifth month in September.
The BOJ may add to stimulus at its next meeting on Dec. 19-20 if the U.S. Federal Reserve also acts at its gathering on Dec. 11-12, said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official. American monetary expansion risks weakening the dollar and driving up the yen, making Japanese exports less competitive. Sixteen economists in the survey forecast that the BOJ will add extra easing in December.
================================================================= No Action Timing of Next Action ================================================================= -----Economist --------------Firm------------------------------- - Francesca Panelli Banca Aletti & C spa Q1 2013 Masayuki Kichikawa Bank of America Merril Lynch Dec. 2012 Chotaro Morita Barclays Capital Dec. 2012 Ryutaro Kono BNP Paribas Jan. 2013 David Rea Capital Economics N/A Kiichi Murashima Citigroup Global Markets Japan Dec. 2012 Hiromichi Shirakawa Credit Suisse Dec. 2012 Hideo Kumano Dai-Ichi-Life Dec. 2012 Maiko Noguchi Daiwa Securities Jan. 2013 Yoshimasa Maruyama Itochu Economic Research Insti Dec. 2012 Hideki Matsumura Japan Research Institute Dec. 2012 Yuichi Kodama Meiji Yasuda Life Insurance Feb. 2013 Jun Ishii Mitsubishi UFJ Securities Dec. 2012 Yasunari Ueno Mizuho Securities Dec. 2012 Naka Matsuzawa Nomura Securities Dec. 2012 Takeshi Minami Norinchukin Research Institute Dec. 2012 Junko Nishioka RBS Securities Dec. 2012 Akio Akabe Shinshu University Dec. 2012 Mari Iwashita SMBC Nikko Securities Dec. 2012 Kiyoko Katahira Societe Generale Q1 2013 Kazuhiko Sano Tokai Tokyo Securities Dec. 2012 Izuru Kato The Totan Research Dec. 2012 =================================================================
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