Bank of Japan (BOJ) as of October 31st 2014, purchasing assets at rate of ¥ 80 trillion per annum in a bid to recover the economy back to inflationary trajectory.
- BOJ governor Kuroda has insisted that he stands ready to increase the pace of purchase if required. Though policy voting of 5-4 in last increase in October continue to pose doubt on such. Prime Minister Abe's economic adviser Mr. Honda, this year has warned BOJ against further easing as it might led to overheating.
- Moreover BOJ is now faced with bad inflation, which is inflation due to higher fuel price. Japan imports most of its energy needs from outside as domestic resource remains poor. Moreover weaker Yen exposes Japan's economy to heavy inflationary pressure from energy side should crude and LNG keep rising.
- Rising bond yields across world would keep policymakers cautious over any further rise.
Japanese are facing tough times to adjusting to higher prices after decades of deflationary pressure. BOJ has taken note of consumption going down significantly with rise in prices.
Japan's debt remains highest. Gross debt according to IMF estimate remains close to 237% of GDP.
Yen would keep consolidating around current level, unless further cue arrives from Dollar side. Yen is currently trading at 120 against dollar.
However Nikkei remains at high risk with Yen consolidating at this level and weaker economic activity. Euro's drop against all the currencies has removed some of Yen's advantage in trade.


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