THE Bank of Japan (BOJ) could announce a “massive stimulus program” as the na-tion seeks to reach a 2-percent inflation target, according to UBS Wealth Management.
“It is how much they do, and whether they can create that kind of shock and awe at this point in the cycle,” said Mark Haefele, global chief investment officer at UBS Wealth Management, in a Bloomberg Television interview, on Monday.
“They could announce a massive stimulus program both on the monetary and fiscal side or they could end up reducing their inflation targets. Right now, it looks like they are going to use more stimulus. ”
Governor Haruhiko Kuroda said over the weekend in the US that the central bank won’t hesitate to boost monetary stimulus if needed, and there is ample space for ad-ditional easing.
He also said at the Federal Reserve’s annual policy retreat in Jackson Hole, Wyo-ming, that the central bank will carefully consider how to best use policy to achieve its price-stability target.
Consumer prices excluding fresh food—the BOJ’s benchmark inflation gauge—fell 0.5 percent in July from a year earlier, gov-ernment data earlier this month showed. That was the steepest drop since March 2013, the month before Kuroda launched unprecedented stimulus.
Japan’s household spending fell for a fifth straight month and retail sales also dropped, government data released on Tuesday show. Benchmark 10-year JGB yields reached a record low of minus 0.3 percent last month before rising to minus 0.075 percent on Tuesday in Tokyo.
The BOJ refrained from increasing bond purchases or cutting negative interest rates further in July.
Japan’s inability to achieve its goals has “put that country and that central bank into some kind of jeopardy that they are going to have to work their way out of,” according to Haefele.
He oversees the investment policy and strategy for about $2 trillion in invested assets at UBS Wealth Management, according to UBS’s web site.