How important is the second sales tax hike to the BoJ?

Despite the recent run of weak data, the Bank of Japan may strike a more positive tone about the economy at its meeting this week, while leaving policy settings unchanged. This would dampen hopes of any imminent increase in the pace of its asset purchases. However, with inflation still likely to fall short of the central bank’s optimistic projections, we continue to believe that more easing will be announced early next year.