FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, note that some BoJ officials see a growing likelihood the central bank will lower its inflation outlook and expect that ther are downside risks to the BoJ’s outlook for growth.
Key Quotes
“The weakness of the yen overnight has been driven primarily by building expectations that the BoJ may announce further monetary easing in the autumn.”
“Ruling LDP lawmaker Kozo Yamamoto, who has advised Prime Minister Abe on economic policy, has stated in an interview with Bloomberg that the BoJ’s policy meeting on the 30th October provides a “good opportunity” to announce further monetary easing. He stated that the BoJ should increase the annual pace of asset purchases by at least JPY10 trillion. He also believes that an extra fiscal stimulus package totalling between JPY3.5 trillion and JPY5.0 trillion is required.”
“Some BoJ officials see a growing likelihood the central bank will lower its inflation outlook and again delay the time frame for reaching its target due to cheaper oil prices according to people familiar with discussions.”
“Building downside risks to the BoJ’s outlook for growth and inflation are likely to remain a weight on the yen in the near-term helping to provide an offset to upward pressure from more risk-averse trading conditions.”
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