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MNI STATE OF PLAY: BOJ To Hold, End Facility For Smaller Firms

(MNI) Tokyo
MNI (Tokyo)

The BOJ is wary of a hit to consumption as inflation rises and real wages decline.

The Bank of Japan is likely to call an end to its special measures to facilitate financing of smaller firms at its Sept. 21-22 policy meeting, as it stands pat on monetary policy in the face of continuing economic weakness.

While officials are monitor rising inflationary pressures due to higher food prices and while a slide in the yen to a 24-year low against dollar could potentially raise political pressure on the Bank to act, the BOJ’s board will likely maintain an easing bias given that the output gap is in negative territory. Fears over downside risks to the economy could even prompt the bank to tweak guidance for “short- and long-term policy interest rates to remain at present or lower levels.” (See MNI INSIGHT: Yen at 150 Would Put Pressure On BOJ).MNI STATE OF PLAY

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The Bank of Japan is likely to call an end to its special measures to facilitate financing of smaller firms at its Sept. 21-22 policy meeting, as it stands pat on monetary policy in the face of continuing economic weakness.

While officials are monitor rising inflationary pressures due to higher food prices and while a slide in the yen to a 24-year low against dollar could potentially raise political pressure on the Bank to act, the BOJ’s board will likely maintain an easing bias given that the output gap is in negative territory. Fears over downside risks to the economy could even prompt the bank to tweak guidance for “short- and long-term policy interest rates to remain at present or lower levels.” (See MNI INSIGHT: Yen at 150 Would Put Pressure On BOJ).MNI STATE OF PLAY

Keep reading...Show less