Any failure by the Bank of Japan to expand its asset-purchase program at Friday's board meeting will sow confusion over its policy, a former policymaker said.
Inaction "would be a disaster for communication," Atsushi Mizuno, who served on the Bank of Japan Policy Board from 2004 to 2009, said Wednesday in Tokyo. All 14 economists surveyed by Bloomberg News before Friday's gathering predict BOJ Gov. Masaaki Shirakawa and his colleagues will boost asset purchases amid forecasts for growth to slow through the year.
Mizuno, now a managing director at Credit Suisse, said more important than the size of the added stimulus will be greater clarity on its policy objectives. Even as the BOJ has pledged to keep monetary stimulus active until price stability is achieved, Shirakawa has warned in speeches in recent weeks that keeping excess stimulus in place too long raises the danger of financial imbalances.