Ex-BOJ Muto tips April-Sept easing, fiscal stimulus in coming year

TOKYO, March 19 Wed Mar 19, 2014 3:53am EDT

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TOKYO, March 19 (Reuters) - Japan's government and central bank will likely unleash more stimulus over the coming year to bolster the economy and stoke moderate inflation, said Toshiro Muto, a former top civil servant and Bank of Japan official.

The Bank of Japan will likely add to its massive stimulus, probably through increased purchases of Japanese government bonds, by September, the former deputy central bank governor and vice finance minister told Reuters on Tuesday.

Investor expectations are running high for the central bank to add to its unprecedented asset-buying to help cushion the economy from an April 1 sales tax increase and hit its 2 percent inflation target, he said.

"I forecast that there is considerable probability of an expansion of the quantitative easing policy as early as April-June and at the latest in July-September," said Muto, chairman of the Daiwa Institute of Research think tank.

In a Reuters poll on Wednesday, seven of 16 economists forecast the BOJ will ease in July, three predicted April 30, two said Oct. 31 and two said the BOJ won't ease this year.

Muto said the chance of further government spending in the fiscal year from April is "very high" to replenish this year's fiscal stimulus as the government decides whether to raise the sales tax again in 2015. (Reporting by Yoshifumi Takemoto; Writing by William Mallard; Editing by Dominic Lau)

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