By Kaori Kaneko and Sumanta Dey
TOKYO/BENGALURU (Reuters) - A majority of economists expects the Bank of Japan will ease policy further next month, a Reuters poll found, while many respondents suspect a change in its inflation target terminology is likely.
But about 40 percent of analysts surveyed said they expected the central bank to keep monetary policy unchanged, showing analysts' expectations are close to evenly divided.
Faced with stubbornly low inflation and new fiscal spending by Prime Minister Shinzo Abe, the BOJ increased its purchases of exchange-traded funds (ETF) in July and said it would review its policies in September, steps that fell short of expectations.
BOJ Governor Haruhiko Kuroda was quoted on Saturday saying that negative interest rate policy had not reached its limits and the central bank would consider whether to make any changes to its 80 trillion yen ($798 billion) per year asset-purchase plan next month.
Asked how the September review might influence BOJ policy decisions, 14 of 24 economists said it would lead to further easing, nine saw no change, and one expected a tapering of the BOJ's stimulus drive, the poll taken Aug 16-24 found.
Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, said the BOJ was likely to slightly tweak its current quantitative easing programme and negative rate policy.
"It could include a change of its monetary base target to make a range and increase corporate bond purchases," he said.
"The central bank is likely to freeze its minus 0.1 percent negative rate."
Economists who penciled in easing for September were, however, split on what precise steps the BOJ was likely to take.
Two economists nominated a further deepening of negative interest rates while two others opted for an expansion of commercial paper and corporate bond buying. Four said the central bank would combine additional asset purchasing and a deepening of negative rates.
Six economists said they expected the BOJ would overhaul its current policy framework.
Fifteen of 28 analysts who answered a separate question in the latest survey said the BOJ would adopt flexible terms on the timing for reaching its inflation target.
Three said it would switch its policy to target interest rates instead of the monetary base, while the remainder opted for other means such deepening negative interest rates. "There is a chance that the BOJ will no longer state a specific time to meet its price target and will change the timeframe target to a mid- to long-term objective" said Takumi Tsunoda, senior economist at Shinkin Central Bank.
"In that case, the BOJ won't come under pressure to ease policy every time it cuts inflation forecasts."
The poll's consensus was for the BOJ to keep its -0.1 percent interest rate steady this year and the next.
More than three years of "Abenomics" - policies that rely on aggressive monetary easing, spending and reform - have so far failed to generate a sustainable return to inflation and growth.
That failure pushed Abe to announce 13.5 trillion yen in fiscal stimulus earlier this month, something Japanese companies overwhelmingly say will do little to boost the economy, according to a separate Reuters poll this week.
The BOJ has shifted the timing of its inflation goal several times since it implemented aggressive policy easing measures in 2013 under Governor Kuroda, as part of Abenomics, and it now expects to hit the target during fiscal 2017, which many analysts think would be difficult.
The poll found that the core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is expected to fall 0.1 percent this fiscal year to next March but will rise 0.7 percent in fiscal 2017, albeit less than half the BOJ's target.
Core CPI fell 0.4 percent in June from a year ago, a fourth straight monthly fall, and is expected to slip again in July data due out on Friday.
($1 = 100.2400 yen)
(For other stories from the poll)