Inflation expectations by households in Japan hit lowest since the Bank of Japan adopted its massive stimulus program in 2013, a quarterly central bank survey showed, keeping alive expectations of more monetary stimulus.
The ratio of households that expect prices to rise a year from now stood at 72.4 percent in June, down from 75.7 percent in March, the Bank of Japan’s quarterly survey on people's livelihood showed on Tuesday. A separate index measuring households' confidence about the economy stood at minus 27.3 in June, worsening from minus 22.5 in March, to hit the lowest level since December 2014.
The survey underlines the sour challenge the Japanese economy is facing in trying to spur public expectations that prices will rise in the future with aggressive money printing. The decline in inflation expectation index marked the fourth straight quarter of declines and the lowest level since December 2012, before the BOJ adopted its quantitative and qualitative easing program in 2013.
Further, the ratio of households who said they had faith in the Bank of Japan's policy management also hit a seven-year low, with more than half of the respondents doubting whether it was independent from government interference, the survey showed.
Moreover, Japan's economy has shrunk on weak private consumption and exports. Core consumer prices in May fell 0.4 percent to mark the biggest annual drop since the BoJ deployed QQE in 2013 to reach a target rate of inflation of 2 percent. However, Governor Haruhiko Kuroda shocked the markets by adopting a negative interest rate into the QQE, an attempt to re-inflate the drowning economy.
Meanwhile, the BoJ survey also showed the ratio of respondents who trust its policies, slid to 40.4 percent in June from 42.4 percent six months ago, marking the lowest level since June 2009. Over half of the respondents said they did not think the BOJ was making policy decisions on a neutral basis, the highest since 2014, the survey showed.


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