BoJ will need to be expanded in the long run – Commerzbank

By FXStreet FXStreet (Córdoba) – The Bank of Japan (BoJ) will remain on the sidelines next week, but it will probably need to expand its QE programme in the foreseeable future, said Antje Praefcke, analyst at Commerzbank.

Key Quotes

“Over the next few days, the data from Japan will confirm that the Bank of Japan (BoJ) will need to do more”.

“GDP looks set to have been flat at best in the third quarter, after having declined in the second. Noticeable price increases are unlikely under these circumstances”. The past BoJ meeting, at which the bank revised its inflation and growth forecasts to the downside, would have been a good opportunity to expand the volume of bond purchase. However, the BoJ did not take this chance. Instead, it will wait until after the Fed decision in December”.

“The BoJ will probably keep its purchase volume at JPY 80 trn at next week’s meeting. With Fed rate hike expectations supporting the dollar and pushing USD/JPY upwards, the BoJ can remain on the sidelines. However, Japanese inflation is unlikely to pick up, which is why the QE programme will need to be expanded in the long run”.
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Source:: FX Street