The decision at the Bank of Japan’s Policy Board meeting next week is likely to be finely balanced. There are several goods reasons to believe the Board will further extend monetary easing, and several strong reasons to think it won’t. On balance, we expect further easing in the next few weeks, but not next week. The wild card, particularly in the days following the Lower House election, is the degree of political pressure that will be exerted on the Board. Politicians have sought to divert attention from their own lack of ideas to put the economy on a stronger footing by chastising the Bank for its lack of monetary stimulus. This is likely to intensify as a new government seeks to assert its mandate. However, the Bank would have good reasons to push back, at least for a while, to assert its independence.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services