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14 May 2015
BoJ might announce further easing later in 2015 – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, explains that the Bank of Japan might announce further easing measures later in this year, but there is also a risk that the bank waits till USD finds firmer ground.
Key Quotes
“The BoJ announced a step up in its surprise QE enhancement policy on October 31 2014. The timing of this announcement was particularly interesting insofar as it coincided with the end of the Fed QE policy and thus enhanced the different policy trajectories of the BoJ and the Fed.”
“Between July 2014 and early December 2014, USD/JPY climbed by 20% lifting the Nikkei 225 and promoting optimism about Japanese economic growth.”
“However, despite the rapid loosening of monetary conditions in Japan, on the heels of last year’s consumption tax hike the BoJ is still struggling to create upside momentum in inflation.”
“We expect that BoJ will have to announce further measures later in the year, though in order to create more ‘bang for its buck’, it is possible that the BoJ may prefer to wait until the tone of the USD has found its way back to firmer ground.”
“We expect the Fed to hike rates in December and anticipate a firmer USD will materialise during H2 as the prospect of higher US rates nears.”
Key Quotes
“The BoJ announced a step up in its surprise QE enhancement policy on October 31 2014. The timing of this announcement was particularly interesting insofar as it coincided with the end of the Fed QE policy and thus enhanced the different policy trajectories of the BoJ and the Fed.”
“Between July 2014 and early December 2014, USD/JPY climbed by 20% lifting the Nikkei 225 and promoting optimism about Japanese economic growth.”
“However, despite the rapid loosening of monetary conditions in Japan, on the heels of last year’s consumption tax hike the BoJ is still struggling to create upside momentum in inflation.”
“We expect that BoJ will have to announce further measures later in the year, though in order to create more ‘bang for its buck’, it is possible that the BoJ may prefer to wait until the tone of the USD has found its way back to firmer ground.”
“We expect the Fed to hike rates in December and anticipate a firmer USD will materialise during H2 as the prospect of higher US rates nears.”