Bank of Japan tipped to maintain “easy money”

Bank of JapanAnalysts say there is little chance Japan will follow the US and Europe by raising interest rates at its meeting on Thursday. “Market watchers looking for signs the BoJ [Bank of Japan] will begin following in the footsteps of the Federal Reserve and ECB [European Central Bank] are likely to be disappointed,” said Katsunori Kitakura, lead strategist at Sumi Trust, a Japanese asset manager. “With inflation far below the BoJ’s current 2% target, the BoJ will not start a move towards normalising policy.” Kitakura said he believed Japan's central bankers, led by Haruhiko Kuroda, who has just begun his second term as governor, would not raise interest rates until next year at the earliest. “There is no strong opposition to Governor Kuroda’s current policy of maintaining easy money until the 2% inflation target is attained,” he added. Jesper Koll, of exchange-traded fund company WisdomTree Japan, said Thursday's monetary policy meeting may reveal an even stronger push towards so-called “easy money” than previously. “We expect that the number of board members calling for added stimulus will rise from one to two, with new deputy governor Wakatabe Masazumi expected to live-up to his ultra-reflation reputation which was a major contributor to his election to the board,” said Koll. ©2018 funds global asia

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