TOKYO - Japan’s central bank is set to ante up on stimulus measures as a rebound in the yen shows that the impact of a $123 billion expansion in asset buys in February is fading.
All 14 economists in a Bloomberg News survey predict additional easing when the Bank of Japan releases new inflation forecasts on Friday. Most expect a rise ranging from $61.5 billion to $123 billion.
One dynamic that may undermine stimulus efforts is Governor Masaaki Shirakawa’s own comments, repeated in the United States last week, that monetary policy has only a limited role in ending deflation and supporting growth. Former Bank of Japan board member Atsushi Mizuno says investors are confused on where the central bank stands, while JPMorgan Chase says failing to ease could see the yen strengthen further.
A stronger yen reduces export sales and profits, weighing on the nation’s recovery from last year’s disasters.
The bank should bolster its purchases of government bonds and commit to monetary easing, a former board member said.