Markets may be looking to Japan’s central bank to goose the economy, but policy easing may have reached its limits, with the next recovery phase left in corporate hands.
“Additional easing should undermine the yen and support equities further, but the actions of the Bank of Japan probably matter much less now than developments overseas and in global risk appetite,” Capital Economics said in a note. “It is also debatable whether additional monetary easing at this stage would have major benefits.”
The Bank of Japan is widely expected to keep its policy unchanged at its meeting this week, despite recent weaker economic data. Japan’s economy grew 0.7 percent on-year in the fourth quarter of 2013, revised down from a preliminary reading of 1 percent, data released Monday showed, coming in below economists’ expectations, according to Reuters.
Investors have been watching the data closely for signs of the relative success of Abenomics, or the around one-year-old plan from Japanese Prime Minister Shinzo Abe aimed at kick-starting Japan’s long-moribund economy out of its decades-long struggle against the pressures of deflation.
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