TOKYO: Japanese inflation expectations hit a three-year low in the first quarter, highlighting the limited effects of the Bank of Japan’s enlarged stimulus. In a poll of about 2,150 randomly selected people, 75.7% said prices in a year will be higher than they currently are, down from 77.6% in the December survey, according to the BOJ’s quarterly opinion survey released Monday.
The reading was the lowest since the March 2013 survey, which was completed a month before Gov. Haruhiko Kuroda launched aggressive monetary easing. The decline came despite the bank’s decision in January this year to introduce negative rates to supplement its asset purchases.
Signs are growing that a single central bank can only do so much to stoke growth or inflation when the global economy is decelerating. Despite a three-year experiment to defeat deflation, economic growth and inflation have remained stuck around zero in Japan. Stock prices have also fallen sharply this year as the yen rose, in a blow to exports and earnings.
Sentiment among consumers about economic conditions over the coming year came to minus 30.9, down from minus 19.9 in December, marking the third straight quarter of deterioration, according to the central bank. The reading was the lowest since December 2012. It subtracts the percentage of respondents saying economic conditions will worsen from those who say they will improve.
The survey, which was conducted after the announcement of negative rate sparked a backlash, indicated the public’s improved awareness of BOJ policy. Of the respondents, 73.1% said they know–or at least have heard about–the bank’s policy target of 2% inflation. That was the highest since September 2013, according to the central bank.
Also, 69.7% said they know, or have heard about, the bank’s quantitative easing measures–the best showing since December 2014. Officials said they chose not to ask about negative rates because the policy change came after preparations for the survey were already made.
