Will the BOJ Consider Withdrawing Stimulus Now That Trade Tensions Look Set to Fade?
A recent Reuters poll estimates that the BOJ is likely to go easy and dial down its stimulus efforts, instead of turning more dovish and easing its monetary policy further. Japan’s central bank already has one of the loosest monetary policies in place worldwide, but the economy remains under strain on account of the trade war.
An increasing number of economists polled indicate that the BOJ could start withdrawing its stimulus efforts by as soon as 2021, which means that the monetary policy could remain loose for at least another year. Markets remain optimistic, however, that economic growth in Japan as well as the rest of the world could pick up in 2020 as global trade tensions recede.
61% of economists in the recent poll anticipate the BOJ would announce a withdrawal of stimulus at its next meeting, higher than the 44% who indicated this as a possible next move during the last poll in November. The Bank of Japan is widely expected to maintain its monetary policy steady at the upcoming policy meeting later this week amid diminishing external risks from Brexit and the US-China trade war.
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