JPY: Probability of additional QQE falls after implementation of supplementary measures –...

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 21, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Research Team at Societe Generale, notes that the Bank of Japan (BoJ) made no changes to its main monetary easing policy at its December monetary policy meeting.

    Key Quotes

    “However, the bank did introduce new supplementary measures, including a new JPY300bn ETF purchase programme in addition to the current purchase programme. In addition, the BoJ extended the average remaining maturity of its JGB purchases to 7-12 years (from 7-10 years). Nevertheless, BoJ Governor Kuroda said the measures did not constitute “additional easing”. Japan’s economic growth and inflation outlook shows the BoJ clearly falling short of its commitment to achieve the price stability target of 2% as soon as possible.”

    “The bank also chose not to implement additional easing at its October meeting when it revised down its economic and inflation outlook substantially. The BoJ states that it believes that the 2% inflation target will eventually be achieved as long as the employment situation continues to improve on the back of increasing corporate profits and a constantly declining unemployment rate.”

    “The hurdle for deciding on additional easing has thus become higher. In that context, the BoJ’s December decision was probably a compromise among policy board members with different opinions towards additional easing. We therefore believe additional QQE has become less likely, and increase the probability of no additional QQE to 70% (from 60% previously).”
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