FILE PHOTO: Bank of Japan Governor Kazuo Ueda participates in a news conference at the Fairmont Washington D.C. Georgetown hotel in Washington, U.S., April 13, 2023. REUTERS/Elizabeth Frantz
By Tim Kelly
TOKYO (Reuters) – Most Japanese firms want Bank of Japan Governor Kazuo Ueda to focus on financial market stability at his first policy meeting next week, with few seeing benefits from any easing of its ultra-loose monetary policy, a Reuters monthly poll showed.
Ueda has so far signalled his intent to maintain those loose conditions, despite telling parliament this week that Japan was still on course to reach the central bank’s 2% core inflation target.
Of nearly 500 major companies polled, 52% said they hoped for financial stability measures, with a third saying Ueda should maintain the policies of his predecessor, Haruhiko Kuroda.
“Markets are volatile, so its desirable for the new board to uphold the stability of the old one,” a representative from an electrical machinery maker said, on condition the company wasn’t identified.
That corporate caution comes after the International Monetary Fund cut its global economic growth outlook for 2023 as it warned of a risk posed by a possible severe flare-up of financial system turmoil, saying that nervous investors could try to test the “next weakest link” in the financial system following the Swiss government-engineered rescue of Credit Suisse.
Slightly less than a quarter of the Japanese firms surveyed by Reuters said they wanted a revision of the BOJ’s negative interest rate policy, down from nearly a half two months ago when Ueda was nominated to his post.
Fewer companies also urged the central bank to revise its inflation target, down to 16% from 28% of those polled in February.
“The zero rate policy has been eased, but if interest rises that could lead to an increase in bad debt that could invite a recession,” said a manager at a steel manufacturer, who commented on condition of anonymity.
Markets, which have been rife with speculation that Ueda will phase out that stimulus, will be closely watching his first policy meeting on April 27-28, when the BOJ board will unveil fresh quarterly growth and inflation forecasts extending through fiscal 2025.
In his first appearance in parliament as governor on Wednesday, Ueda defended the purchasing of government bonds that Kuroda ramped up as part of his push for 2% inflation. He also urged companies to invest in their workforces.
The Reuters Corporate Survey, conducted for Reuters by Nikkei Research between April 5 and April 14, canvassed 493 big non-financial Japanese firms, including 246 manufacturers and 247 non-manufacturers.
They were polled on condition of anonymity, allowing respondents to speak more freely.
Click here for a more detailed breakdown of the poll results.