FXStreet (Delhi) – Research Team at BBH, suggest that the recent comments from Japanese policymakers continue to support our view that markets might be overestimating the odds of imminent action by the BOJ.
Key Quotes
“A recent survey showed that some 40% of market participants expect the BOJ to ease in December, and this number is probably higher now after Draghi’s comments. Overnight, an adviser to PM Abe, Koichi Hamada, stated that they can “wait for a while” before conducting more easing as long as Japan’s labour market remains tight.”
“Last week, another advisor, Etsuro Honda, noted that immediate additional easing by Bank of Japan is not necessary. While Hamada and Honda are probably not the most influential voice in this decision process, serves as an indicator of how little consensus there is about taking action in the near term, and where the directive for communication is at.”
“More importantly, Deputy Finance Minister Aso has also played down the effectiveness and the trade-offs of more easing in the near term. He said that it would be hard for prices to reach 2% even if the BOJ eased now, and that there are limits to how much monetary policy can push up prices.”
“So unless the Japanese policymakers are purposefully setting markets up for a surprise, there doesn’t seem to that much evidence pointing towards imminent easing to support this degree of market expectations.”
(Market News Provided by FXstreet)