According to a survey from Bloomberg, economists are looking for an expansion of current monetary easing in Japan. 20 of the 26 participants see an increase in Abenomics, though there is no consensus on when, as inflation remains stubbornly low or negative. The Bank of Japan has set a goal of 2% inflation and thus far prices (excluding fresh food) have been contained with the most recent data showing only a .4% rise in the BoJ’s preferred inflation statistic.
A barrage of recent positive data including soaring GDP, increased manufacturing, and risingreal estate values has pointed to a success for stimulus. Although some local government officials have brought to light the negative effects of monetary and fiscal policy, many are calling for more in light of the lofty inflation targets set forth by the BoJ in conjunction with a possible tax hike in the near future. The consumption tax being supported by central bank chief Kuroda is thought to be a net negative for the Japanese economy and could also lead to the need for increased monetary easing.
“It’ll be really difficult to achieve 2 percent inflation in two years,” said Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. “A sales tax increase will undoubtedly slow the Japanese economy and inflation momentum.”This Hedge Fund Believes The New Real Estate Cycle Is “Well Underway”
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“Mr. Kuroda seems to be in favor of the consumption tax hike,” [Koichi] Hamada said in a phone interview from his home in Connecticut, U.S. “In that case, he should be ready to use the strong medicine of monetary policy if the economy falters.”
Kuroda should “accelerate monetary policy” if the economy is precarious or unsteady in the first or second quarters, Hamada said.