After the huge announcement of the ambitious QE program on April 4th, the Bank of Japan made no policy changes for the second time in a row.
However, the BOJ did upgrade the economic outlook and noted some improvement in a variety of fields. In some, the BOJ sees growth, and in others a slower decline.
The not that bad: Capital investment stopped weakening, exports are not decreasing and industrial output also stopped declining.
The good: consumer sentiment has picked up together with private consumption. In addition, housing investment is on the rise.
On the main issue that the BOJ is dealing with, deflation, the BOJ was cautious and said that some indicators suggest higher inflation expectations. It also stated that CPI will probably fall for now, but turnaround later on. The BOJ could be surprised one day that it gets more than it asked for.
USD/JPY remains range bound, awaiting news from Ben Bernanke.
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