The Bank of Japan may initiate further quantitative easing by the end of the year, following a similar move in October, Daiwa Institute of Research Chairman Toshiro Muto said in a recent interview.
At its Policy Board meeting last week, the central bank decided to expand its asset purchase program by ¥11 trillion by increasing the purchase amount of not only government bonds but exchange-traded funds and other riskier assets.
“The BOJ is (moving) in the right direction,” Muto said.
But the former BOJ deputy governor also said the bank “could have taken a bolder measure.”
“If the U.S. Federal Reserve decides to provide fresh monetary stimulus in December, the BOJ would find it necessary to expand its asset purchase program, again,” Muto said.
He thus forecast such a BOJ step would come before the end of the year, saying “there is a good possibility that the BOJ will increase its funds for the asset purchases in the not-so-distant future.”
Muto predicted that economic growth will remain moderate.
As for domestic prices, he called the BOJ’s forecast of a 0.8 percent increase in the core consumer price index, excluding fresh food prices, in fiscal 2014 “too optimistic.” The year-on-year CPI growth forecast also excludes the effects of the consumption tax hike to take effect that year.