FXStreet (Delhi) – Research Team at Nomura, note that the Japanese government is likely to resort to supplementary budget, in addition to further monetary easing in case its economy goes into downward spiral in future.
Key Quotes
“One possible response from the Japanese government to this downside risk, in terms of fiscal policy, would be to introduce an FY15 supplementary budget comprising government spending of around ¥3.5–4.2trn with no additional JGB issuance.”
“Measures aimed at stimulating consumer spending (such as premium gift certificates) are more likely to be added to public works spending if the risk of economic stagnation is thought to be so great as to be likely to extend to a weakening of consumer spending.”
“In our main scenario for Japanese monetary policy, we expect the BOJ to implement additional monetary easing, centered on equity ETF purchases, in April 2016. However, if the risk emerges of a substantial economic downturn in Japan, we think the BOJ will probably implement additional monetary easing centered on an increase in its purchases of equity ETFs at an earlier date.”
“The decision may be made on 30 October, to coincide with the publication of the BOJ's Outlook Report, or even at the monetary policy meeting on 6–7 October if the risk of an economic slowdown appears to have increased.”
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