THE Bank of Japan (BOJ) could announce a “massive stimulus program” as the nation 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,” Mark Haefele, global chief investment officer at UBS Wealth Management, said yesterday. “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.”

    BOJ Governor Haruhiko Kuroda said over the weekend in the United States that the central bank won’t hesitate to boost monetary stimulus if needed, and there is ample space for additional easing.

    He also said at the U.S. Federal Reserve’s annual policy retreat in Jackson Hole, Wyoming, that the Japanese 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 ago, government data showed. That was the steepest drop since March 2013, the month before Kuroda launched unprecedented stimulus.

    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 US$2 trillion in invested assets at UBS Wealth Management.

    The BOJ is currently undertaking a review of its monetary policy ahead of its next meeting Sept. 20-21. Whether BOJ adopts more stimulus with the yen at its current level or waits to see if it strengthens more is “an open question,” he said. (SD-Agencies)