Central Banks

Financial Times says the BOJ will face pressure to ease monetary policy

FT with a piece looking at the impact of the sales tax hike in Japan

(Tax was raised on octo October 1)

  • figures from Nowcast, which uses supermarket scanners to compile real-time data on consumption and inflation, sales fell 10-20 per cent during the first week of October compared with the same period the previous year.
  • Spending patterns ahead of the increase had suggested that consumers were not behaving as they did ahead of the last tax rise in 2014, when a post-increase slowdown led to recession.

The article concludes with an outlook for the Bank of Japan:

  • BoJ has promised a review at its meeting on October 31
  • Signs of slowing consumption will strengthen the case for monetary easing
  •  but … the BoJ may fear that deeper negative interest rates could deal a further blow to consumer confidence, encouraging it to stay on hold unless there is a sharp rise in the yen. 


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