TOKYO -- The Bank of Japan should modify its monetary policy when the inflation rate holds steady above 1%, a plurality of private economists said in the latest poll by the Japan Center for Economic Research.
Twenty out of 40 private sector economists in the monthly ESP Forecast for March thought the BOJ should change course when the core consumer price index, which excludes fresh foods, achieves growth of more than 1% on the year. Nine economists said the central bank should recalibrate its policy as soon as possible, while five favored making the change only when inflation hits 2%.
As for how the BOJ can reshape its ultraloose program, 24 out of 36 economists responding urged raising the target level for guiding long-term interest rates. Nineteen called for the central bank to scale back its buying of exchange-traded funds, while 15 favored trimming language concerning the pace of Japanese government bond purchasing. Another 12 encouraged shortening the target maturity of JGBs in rate control operations to less than 10 years. The survey permitted multiple responses.
The economists' average expected inflation rate for fiscal 2018 came to 0.94%. The metric stood at 0.92% for fiscal 2019, barring the effects of the national sales tax increase scheduled for that year.
But 22 of the 41 economists surveyed predict inflation will surpass 1% in fiscal 2018, and 19 out of 40 forecast the same for 2019. No economist in the survey thinks prices will rise by the BOJ's 2% target during that period.
Masayoshi Amamiya, a longtime central bank insider, and former college professor Masazumi Wakatabe were officially seated as deputy BOJ governors Tuesday. They form a new policy triumvirate with Gov. Haruhiko Kuroda, who was confirmed to a second five-year term last week.
Wakatabe, known as a reflationist, is on record saying the BOJ should not hesitate to expand its monetary easing program if necessary. But he also said his thinking can evolve if confronted with persuasive data and debate within the central bank.