8 Jan 2016
BoJ to remain on hold for now - TDS
FXStreet (Delhi) – Research Team at TDS, suggests that Japan remains mired in deflation, but we are starting to see some tentative signs of stabilization—albeit at very low levels.
Key Quotes
“The headline index and related measures paint a very benign inflationary backdrop, we note that food and energy have been a significant contributor to this trend. Excluding these two components along with the impact of the consumption tax— the BoJ’s now-preferred metric—points to a “core-core” measure that at 1.2% y/y is actually sitting at its cycle highs.
From our perspective, last December’s BoJ meeting illustrates that Japanese policymakers have little appetite to ease further—at least in any meaningful sense.
We think the threshold to receiving another major dose of BoJ balance sheet expansion is rather high at this point. Indeed, unless there is a significant downturn in the global growth outlook, the BoJ may hold its fire on this front until April 2017. This is when another boost to Japan’s sales tax (to 10%) is scheduled to take effect.”
Key Quotes
“The headline index and related measures paint a very benign inflationary backdrop, we note that food and energy have been a significant contributor to this trend. Excluding these two components along with the impact of the consumption tax— the BoJ’s now-preferred metric—points to a “core-core” measure that at 1.2% y/y is actually sitting at its cycle highs.
From our perspective, last December’s BoJ meeting illustrates that Japanese policymakers have little appetite to ease further—at least in any meaningful sense.
We think the threshold to receiving another major dose of BoJ balance sheet expansion is rather high at this point. Indeed, unless there is a significant downturn in the global growth outlook, the BoJ may hold its fire on this front until April 2017. This is when another boost to Japan’s sales tax (to 10%) is scheduled to take effect.”