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BOJ to hold-off easing today? - Rabobank

FXStreet (Mumbai) - Analysts at Rabobank argue whether the Bank of Japan (BOJ) will unveil further easing measures or stand pat at today’s meeting against the backdrop of Japan’s poor growth numbers and a non-committal stance of the Fed.

Key Quotes:

“Indeed, with the Fed signalling that at long last it will hike, today’s first focus is whether the BOJ will flag that they are going to ease further at long last.”
“Recent comments from the Bank suggest this is unlikely today regardless of the fact that inflation is nowhere near their 2% target, and the Japanese economy slipped back into a technical recession in Q3, making a mockery of their constantly upbeat projections.”

“It’s not certain if their reticence to act - yet - is due to genuine optimism that ‘this too shall pass’, or to underlying concerns that increasing QQE from JPY80 trillion to JPY100 trillion per month, for example, would show that even extraordinary monetary policy has its limits due to a lack of assets to purchase.”

“Fortunately, the government may be about to help out, with suggestions that another supplementary budget will be required. That will at least give the BOJ more JGBs to buy if needed; it will also underline why JPY should continue to fall.”

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