FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, suggests that after the ECB President Draghi laid out the risk of further easing, the BoJ may also increase its policy stimulus at this week’s January 29 policy meeting. Key Quotes “On Saturday, in an event in Davos, BoJ Governor Kuroda commented that the BoJ “won’t hesitate adjusting policy, including easing policy, if necessary to achieve our 2 percent price target”. He also remarked that “I don’t think there is a technical limitation to further strengthen our quantitative and qualitative easing (programme) is necessary to achieve our 2% target”. The release of Japanese November core CPI inflation data recorded a slightly firmer 0.9% y/y, up from 0.7% y/y in October. Headline data at 0.3% y/y remains heavily constrained by soft energy prices. December CPI data are due later in the week and the market is expecting the core measure to remain at 0.9% y/y. The upside pressure on the JPY since the start of the year against the USD and the CNY and the resultant increase in the value of Japan’s effective exchange rate may have a depressive impact on the inflation outlook and therefore increases the prospect that the BoJ may be more included to step up the size of its QQE plan. However, the BoJ may want to see the outcome of this spring’s wage negotiations before pulling the trigger. While BoJ a step up in BoJ easing is on the cards in the coming months, steady policy may yet be preferred this week. A ‘no change’ outcome this week is likely to pressure EUR/JPY towards the 127.50 area.” For more information, read our latest forex news.