Further easing still likely to be needed

The Bank of Japan’s decision to step up the pace of asset purchases at the end-October meeting has resulted in a sharp fall in the yen, which should lift consumer prices in coming months. What’s more, the Bank has extended the timeframe for achieving the 2% inflation target. Policy settings will therefore almost certainly remain unchanged at the upcoming meeting. However, we think that even the revised targets will eventually be missed, so additional easing will still eventually be needed.