BoJ unlikely to expand lending facilities any further

The Bank of Japan today expanded its lending facilities further. The total amount of support for corporate funding is now equivalent to nearly 20% of the debt of non-financial firms and we don’t expect any further increases over the coming months.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Update

BoJ unlikely to lift interest rates anytime soon

The Bank of Japan today upgraded its assessment of inflation risks to “broadly balanced” for the first time since 2014. However, it reiterated its pledge to keep expanding the monetary base until inflation exceeds 2% and also signaled that it will keep interest rates low. With inflation set to fall well short of the BoJ’s 2% target for the foreseeable future, the Bank won’t be able to tighten policy.

18 January 2022

Japan Data Response

Japan Machinery Orders (Nov. 2021)

The rise in machinery orders in November supports our view that business investment recovered strongly across Q4. And private investment should continue to rebound strongly this year as firms look past a brief hit from Omicron.

17 January 2022

Japan Economics Weekly

Strict isolation rules could cause severe shortages

While we think Japan’s economy entered 2022 just above its pre-pandemic level, consumer spending will probably be knocked back this quarter by light-touch restrictions which are likely to be reimposed across most of the country within the next couple of weeks. Moreover, the added transmissibility of Omicron is likely to lead to a sizeable wave of staff absences in Japan. While PM Kishida is set to reduce the isolation period for coronavirus patients and their close contacts from 14 to 10 days, that would still be a strict isolation regime when compared with most Western countries. All told, we think Omicron will limit the economy to just a 0.2% q/q rise this quarter before a rebound in growth across Q2 and Q3.

14 January 2022

More from Marcel Thieliant

Australia & New Zealand Economics Update

RBA may make QE more flexible

We now expect the RBA to refrain from announcing a target for the overall amount of bond purchases at the July meeting while keeping the weekly pace of purchases unchanged at $5bn. A more flexible approach to bond-buying would make it easier for the Bank to end QE by mid-2022 as we anticipate.

8 June 2021

Australia & New Zealand Economics Weekly

Solid Q1 GDP more than makes up for Q2 weakness

The strong rise in GDP in Q1 has prompted us to revise up our GDP forecasts for this year. And while the Victoria lockdown will weigh on consumption growth in Q2, sentiment is holding up so we expect consumption to rebound in Q3 once the lockdown is lifted. Finally, soaring demand for housing is driving record capacity constraints in the construction industry. With the border likely to remain closed until the middle of next year, construction firms will find it difficult to alleviate the labour shortages they are facing.

4 June 2021

Japan Economics Weekly

Industry to benefit from recovery in capital spending

The slump in retail sales in April suggests that consumer spending may have fallen further during the third state of emergency. However, the medical situation is improving and the vaccination rollout is accelerating. And Japan’s traditional growth engine, its large manufacturing sector, is roaring back to life as industrial output is now above pre-virus levels. While GDP growth this year will fall short of expectations, we think it will be stronger than most anticipate in 2022.

4 June 2021
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