BOJ will decide on easing by mid-May
An adviser to Prime Minister Shinzo Abe said that the Bank of Japan could decide as soon as mid-May whether further stimulus is needed to keep inflation on track for its 2% target after a sales-tax increase next month.
According to forecasts, Japanese GDP will contract an annualized 3.5% in 3 months from April as the government’s raising the sales levy from 5% to 8% in an effort to reduce the nation’s debt. At the same time Japanese Prime Minister Abe’s trying to end 15 years of deflation with fiscal and monetary stimulus and steps to boost private-sector growth.
Last week the Bank of Japan’s Governor Kuroda reiterated he will adjust policy without hesitation if risks appear that could prevent the economy from achieving the central bank’s goal. However, if leading economic indicators that reflect outlooks for sales, profits and inflation do not show a big dent as a result of the sales-tax increase, further easing, according to the advisor, would not be needed.