Sales tax hike alone unlikely to prompt further stimulus

The Bank of Japan will almost certainly maintain its current policy settings at the conclusion of the first of this month’s two Board meetings on Tuesday (8th), despite the hit to GDP from the consumption tax hike. It makes sense to wait and see how the economy responds, both in the second quarter and in the third. If Board members do think that more immediate action is required, the more obvious timing for this announcement would be the meeting on 30th April, when new growth and inflation forecasts will be released.