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The BoJ has little ammunition left, possibly taking rates further negative as the last option. Much of the response in Japan, as in Europe, will have to come from fiscal policy, according to strategists at ANZ Research.

Key quotes

“We now expect Japan to contract by 0.4% in 2020. The onus is on fiscal policy to support growth.” 

“It will be difficult for the BoJ to add more stimulus. It may cut rates further negative if the yen strengthens significantly.”

“The BoJ has issued a statement that it will do what it can to support liquidity and overall financial stability.”