The Bank of Japan will ease policy again by July as prospects for higher inflation remain remote and the outlook for the economy weakens, according to a Reuters poll.
The world's third-biggest economy posted the strongest growth among industrial powers in the first half of 2013, spurred by Prime Minister Shinzo Abe's reflationary policies. But growth has slowed to around 1% in recent quarters as capital spending and consumption weakened.
A further blow when the national sales tax increases in two weeks is likely to convince BOJ policymakers to add to the bank's unprecedented stimulus, the poll said.
"Some economic data for April-June which reflect the sales-tax hike effects will be on the table around July and they will likely show the economy is weaker than the BOJ's view," said Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute.
"This will give the BOJ a reason to ease policy in order to achieve its 2% inflation target."
Seven of 16 economists who answered an extra question expect the central bank to ease at its July meeting. Three said the bank will move on April 30, two said October 31 and two said the BOJ won't ease this year.
The pessimism in the poll, taken last week, is in marked contrast to BOJ Governor Haruhiko Kuroda's view, which is that Japan is moving steadily out of entrenched deflation and toward his price target, that growth can weather the tax hike and flagging exports will pick up.
But he also says he will not hesitate to act if his forecasts derail, recently telling Jiji news agency there is "no limit" to what the central bank can do if it sees the need to adjust policy.
