Lower Expectations on BOJ to expand stimulus in 2013

Economists are ditching forecasts for the Bank of Japan to further expand its record easing this year amid signs that a recovering economy may spur inflation.

Thirteen of 20 economists in a Bloomberg News survey completed July 8 saw no extra loosening in the next six months, a reversal from a poll in May. The board will leave the scale of its bond purchases unchanged at the two-day meeting starting today, according to every economist polled in the latest survey.

Governor Haruhiko Kuroda spurned extra steps to limit bond-market volatility in June, convincing more analysts and investors he will refrain from stepping up stimulus following his opening salvo in April. Forecasts due at the end of this week’s policy meeting will give the board’s latest view on how quickly he and Prime Minister Shinzo Abe can push the nation toward a 2 percent inflation goal.

“The BOJ is very reluctant to take any small steps,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. “They are going to hold firm for a while unless something really big happens that forces them to change their price outlook.”

Bloomberg

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