Political Pressure Mounts as BOJ Avoids Stimulus

By TraderVox.com

Tradervox.com (Dublin) – After adding 10 trillion yen to the existing asset purchases kitty last month, the Bank of Japan refrained from additional stimulus last week. The Japanese central bank held the asset purchases fund at 55 trillion yen as it kept the interest rate at near zero rates according to a statement it released last week after a two-day BOJ policy makers meeting in Tokyo. The Meeting, which was attended by the Economy Minister Seiji Maehara, was largely anticipated to make no changes to the monetary policy. However, the presence of Economy Minister is an indication of the government’s concern about the strengthening currency.

It is anticipated that the next meeting, which will be on October 30, may resolve to add more stimulus to the market. Hiroshi Shiraishi, a Tokyo-based Economist at BNP Paribas SA, indicated that there is a high chance the BOJ will make additional easing in the next meeting, predicting an additional stimulus amounting to ten trillion yen. Morgan Stanley and Credit Suisse AG indicated that the market is now turning its attention on the next BOJ meeting, forecasting that Japan will experience two straight quarters of economic contraction by the end of the year.

Maehara, the Economic Minister, said that the attended the meeting to express the sense of crisis about the strength of the yen in the foreign exchange market. He added that he plans to attend more meetings as he tries to keep pressure on the BOJ to act. According to Masaaki Kanno, the Chief Economist at JPMorgan Securities Japan Co, while the attendance of the Minister did not have a profound impact on the policy today, there will be an impact in the coming meetings. Increased pressure from the political class came from Prime Minister Yoshihiko Noda, who promised to fight inflation within a year. Shinzo Abe, who heads the opposition political party, indicated that he wants the inflation rate of three percent from the one percent target set by the bank.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox