BOJ won't raise long-term yield target in 2018: Economists’ poll

TOKYO, Jan 20 (Reuters): A majority of economists polled by Reuters believe the Bank of Japan will keep its long-term interest rate target unchanged this year, though 40 per cent expect a hike, reflecting the mounting speculation as Japan's economy continues to strengthen.

Forty economists, polled between Jan 10-16, filled in a chart to indicate where they expect the BOJ's long-term rate target would be each quarter up to the middle of 2019.

Around 40 per cent predicted the BOJ would raise the target this year, but the rest either projected it would remain at zero in 2018 or left some future quarters blank, saying their outlook depended on who would be the new BOJ governor after Haruhiko Kuroda's term ends in early April.

Kuroda is widely expected to be asked to stay on.

Many economists didn't foresee the Bank of Japan unwinding its massive stimulus this year, but 16 did.

Two thought the central bank could begin cutting back in April, two said September, eight predicted October and four predicted December.

Seventeen expected the wind down would begin in 2019 or later.

Economists also largely thought the BOJ would continue - in its policy statements at least - to target an annual increase in its bond holdings of 80 trillion yen.

But, some economists said the target is a facade as the bank's actual purchases have fallen to about half that pace.

In September 2016, the BOJ adopted the novel approach to guide 10-year yield around zero per cent and keep its short-term interest rate at minus 0.1 per cent.