The Bank of Japan convenes at a high frequency, often twice a month. In the first meeting for October we had no surprises from Tokyo: policy was left unchanged.
However, the next meeting on October 30th could see action. Kuroda, like Yellen, is data dependent.
Why is the October 30th meeting important? That’s when the BOJ assesses its own semi annual outlook. A report that is published only twice a year is more important, making the meeting critical.
BOJ Governor Haruhiko Kuroda said that they will thoroughly debate the price trend, even if it is still rising. They will also “closely watch” CPI. He followed by saying that he will not hesitate to ease policy further if necessary.
Is this enough for action? Apart from the Bank’s own assessment, we will also have a read on Q3 GDP, which will tell us if Japan is in a recession or not. Last year, when it was revealed that the sale tax hike had sent the world’s third largest economy into a downturn, the BOJ announced a huge expansion of its QQE program.
However, this time may be different because of the Trans Pacific Partnership (TPP). Further action from the BOJ could weaken the yen significantly and this could anger US lawmakers regarding the approval of the agreement which Japan needs.
More: BOJ likely to introduce QE3 In Late October – Credit Agricole
In the meantime, the yen hardly moves and continues hugging the 120 level.
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