The Bank of Japan likely heaved a sigh of relief following Friday’s strong economic numbers, but the central bank will have to remain “on guard and prepared to do more” amid the present global uncertainty, said the chief Japan strategist at Goldman Sachs, Kathy Matsui.
However, the BOJ has “pretty limited” options if the trade friction between China and the U.S. becomes worse, according to Matsui.
Japan reported Friday that gross domestic product grew at an annualized rate of 1.8% in the second quarter which ended in June, preliminary data from the Cabinet Office showed. It was much better than a median forecast for a 0.4% growth.
It comes at a time when short-term interest rates in Japan has been unchanged at -0.1% since the BOJ adopted negative interest rates in January 2016. The country’s central bank has been struggling to meet an elusive inflation target of 2%.
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