Japan’s economy probably shrank for a second straight quarter in Q3. With the economic recovery grinding to a halt, the chances of hitting the Bank’s 2%inflation by next summer are dwindling rapidly. What’s more, there are signs that near-zero inflation rates are undermining expectations of longer-term price gains. The case for additional monetary easing is therefore increasingly compelling. One implication is that the recent stock-market sell-off should sooncome to an end.
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