Shares in Japan have opened flat in Friday’s session, with investors remaining cautious, as the country’s central bank is at the tail end of its two-day meeting to discuss monetary policy.
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(AP Photo/Eugene Hoshiko, File).
FILE – In this Friday, Nov. 13, 2015, file photo, the American flag flies above the Wall Street entrance to the New York Stock Exchange.
“Japan’s economy may see the pace of recovery slow for a while due to some weakness in exports and output”, Kuroda said. Meanwhile, it is unclear whether the BOJ will improve policy communications and address investors’ concerns regarding the side effects of negative rates, the sustainability of the QQE program and the credibility of the 2% inflation target. “It’s obvious that there has been a mini credit crunch in Japan and the banks have underperformed”. But the measures fell short of expectations among many investors for more aggressive action.
There has also been growing speculation that the bank may turn to unconventional measures, such as so-called “helicopter money”.
Following the release of the Census Bureau’s advance economic indicators report, the Atlanta Fed GDPNow forecast for second-quarter growth tumbled by half a percentage point to 1.8 per cent. The consensus estimate among economists surveyed by Bloomberg is for annualized quarter-over-quarter growth of 2.6 per cent.
“Many feel [the government stimulus package] has been rushed through to put additional pressure on the BOJ”, said Weston.
The BOJ said on Friday it will increase ETF purchases so that its total holdings increase at an annual pace of Y6 trillion, up from the current Y3.3 trillion.
The BOJ already is injecting about 80 trillion yen ($760 billion) a year into the economy through asset purchases, mainly of Japanese government bonds.
Pressure for BOJ action has intensified leading up to the rate review with Japan’s economy minister urging the bank to work with the government to spur growth in the wake of Prime Minister Shinzo Abe’s announcement of a bigger-than-expected Y28 trillion stimulus package on Wednesday.
Capping off a big week for the global economy – following the Federal Reserve and BOJ meeting – the European Banking Authority will announce the results of its stress tests on Friday evening, 9 pm London time, which is expected to shed light on non-performing loans at Italian lenders.
The central bank did not change the interest it charges on policy-rate balances it holds for commercial banks, which is now at a record low minus 0.1 percent.
ASX up 0.1, Kospi up 0.2%, Nikkei down 0.2%. In the immediate aftermath of the announcement, the yen strengthened to the mid-102 range against the dollar from mid-104, and the Nikkei 225 index fell over 400 yen after the BOJ made its statements.
“Today’s decision is clearer evidence of the BoJ’s limited room for further easing”, Takahiro Sekido, a Japan strategist at Bank of Tokyo-Mitsubishi UFJ, said in an e-mail.
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Japan’s household spending fell 2.2 percent on-year in June, a relatively steep decline compared to a Reuters poll that predicted a 0.3 percent drop. China’s Shanghai Composite Index slipped 0.1 percent to 2,992.34. But tightness in the job market has not spilled into significant increases in wages that might help spur more consumer demand and encourage businesses to investment in the short of “virtuous cycle” Abe has been promising since he took office in late 2012.
