Poor Tankan increases pressure on Japan's policymakers

The Bank of Japan’s Tankan survey showed business conditions deteriorated sharply in Q4, adding to evidence that the economy is likely to have contracted for a third consecutive quarter. The winner of Sunday’s Lower House election is likely to seize on the weak headline result to justify a fiscal boost, but we expect policymakers at the Bank of Japan to hold off from further monetary easing until January as the survey also showed that financial conditions remain extremely accommodative.