FXStreet (Delhi) – Yann Quelenn, Market Analyst at Swissquote Bank, notes that the Japanese Prime Minister Shinzo Abe is still looking at other ways to stimulate the Japanese economy.
Key Quotes
“The Qualitative and Quantitative Easing approach has yet to prove its effectiveness. Inflation and growth remain subdued. The economy contracted in Q2 at 1.2% y/y and the CPI annualized CPI is stuck at 0%. Therefore, Abe is now focused on the results of his fiscal arrows, already appearing very decisive for Japan’s future.”
“He reiterates that he will push forward to reduce the corporate tax rate below 30% (below expectations) in order to boost domestic investment. This would put Japan’s corporate tax at a level comparable to other countries. At the same time, this should also be accompanied by a consumption tax hike, the first we’ve seen since April 2014.”
“We continue to watch closely for any data from Japan. Its current Balance of Payment current account balance hit a surplus of 1’468bn yen ($11.9bn) in September 2015 for 15 consecutive months despite it narrowed in August. The country is still running a surplus, mostly due to the decrease in commodity prices. The USDJPY is driven by increasing U.S. rate hike expectations and by the global outlook uncertainties. The greenback should monitor the 124 yen level.”
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