The Bank of Japan is likely to maintain its massive monetary stimulus on Tuesday and offer a bleaker view on factory output, following signs that the world’s third largest economy was hit harder than expected by a sales tax increase six months ago.
Central bank policymakers are seen sticking to their view that the economy will pass through a temporary soft patch to resume a moderate recovery and achieve the bank’s 2 percent inflation target next year without additional monetary stimulus.
An intense burst of monetary and fiscal stimulus, which were the first two arrows of Prime Minister Shinzo Abe’s strategy to end 15 years of deflation, has helped boost business sentiment by lifting share prices and weakening the yen.
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