Reuters
Nearly half of Japanese firms say that new leadership at the central bank should revise its negative interest rate policies, while more than a quarter say its price target should be changed, according to a Reuters monthly poll.
The government nominated academic Kazuo Ueda to head the Bank of Japan as the decade tenure of Governor Haruhiko Kuroda nears its close. All eyes will be on Ueda when he speaks in parliament on Friday and Monday, looking for hints at how he may unwind the BOJ’s unprecedented monetary easing without throwing financial markets into turmoil.
Among nearly 500 major companies polled, 47% said the BOJ should modify policies that allow interest rates to go negative. In the next most common response, 28% said the central bank should revise its 2% inflation target.
“A sudden change in monetary policy could be very damaging to both firms and individuals, so it would be good to aim for a soft landing,” said a manager at an information services firm, who commented on condition of anonymity.
Only 9% said the BOJ should scrap its yield curve control (YCC) policy, a trading band for bond maturities that has come under increasing attack by speculators. Even so, a majority of companies, 62%, said a normalisation of monetary policy would not have a good or bad impact on their business.
Asked to rate Kuroda’s legacy at the central bank, respondents gave him middling to positive grades, overall. On a scale of 0-100, 46% of respondents, the biggest cohort, put Kuroda in the middle quintile of 41-60 points.
Kuroda was rated in the top two quintiles by 40% of managers, compared with 14% who put in the bottom ranks.
“There are pros and cons,” a manager in the electronics industry said about the Kuroda BOJ. “It certainly supported the economy, but it also led to massive fiscal expansion by the government.”
Corporate managers remained pessimistic about the near-term environment, with 80% saying conditions would be “not so good” to “bad” in the next three months, nearly unchanged from the previous survey.
The Reuters Corporate Survey, conducted for Reuters by Nikkei Research between Feb. 8-17, canvassed 493 big non-financial Japanese firms, comprised of 246 manufacturers and 247 non-manufacturers. They were polled on condition of anonymity, allowing respondents to speak more freely.
