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The Financial Times (FT) carried an article on Tuesday, assessing the impact of the sales tax hike in Japan.

Key Highlights:

“Figures from Nowcast, which uses supermarket scanners to compile real-time data on consumption and inflation, sales fell 10-20 percent 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 a recession.

BOJ has promised a review at its meeting on October 31.

Signs of slowing consumption will strengthen the case for monetary easing.

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.”