Sources Say BOJ Will Not Expand Stimulus This Week

Bank of Japan policymakers are in no mood to expand monetary stimulus this week, sources familiar with their thinking say, even as poor data challenges their presumption that economic recovery will boost inflation to its 2 percent target next year.

When BOJ Governor Haruhiko Kuroda last opened the monetary taps, in October, he was backed by a razor-thin majority on the bank’s board, and although subsequent changes have moved the board closer to his policy stance, a repeat looks even less likely now, the sources said.

With inflation and growth still in the doldrums despite the bank’s 80 trillion yen ($665 billion) per year asset buying measures, they said the board had grown increasingly concerned about their diminishing policy options and the downsides of the stimulus, such as draining liquidity from the government bond market.

Investors mostly expect the BOJ to stand pat at least until Oct. 30, when it updates its long-term economic and growth forecasts, so a surprise move might have an outsized impact on markets.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza