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Analysts are divided on what the BoJ will do next, according to a Reuters survey, and more and more people think the next step will be to lift the stimulus.
While a little over half of analysts expect the BoJ to ease policy further, the number of people who take the opposite view has increased significantly, tripled from the previous month's survey, even though the bank's meeting at the end of October sent the strongest possible recent rate cut signal so far.
Signs of easing in the Sino US trade war and a reversal in the yen's recent appreciation have prompted some analysts to change their forecasts.
"The U.S. - China trade talks are expected to make progress, and the deterioration of the global economy has been alleviated to a considerable extent," said Hiroaki Mutou, chief economist at the Tokyo Research Center in the East China Sea.
"The risk of excessive yen appreciation also recedes. So the BoJ doesn't need to actively relax policy. "
According to the Reuters survey conducted on November 6-12, 23 or 56% of the 41 analysts surveyed predicted that the next time the Bank of Japan takes action, it would be to relax the policy, which is significantly lower than 85% of the survey results last month.
By contrast, 18 or 44% of analysts think the BoJ will lift the stimulus next, a sharp increase from six in the last survey. All 18 analysts expect the BoJ to lift stimulus measures in 2021 or later.
The BoJ kept its policy unchanged during the policy review on October 30-31, but adjusted its forward-looking guidance and sent the strongest signal so far about possible future interest rate cuts, highlighting the BoJ's concern that overseas risks may undermine Japan's fragile economic recovery.
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