Weak data to test BOJ’s rosy economic view, policy on hold
The Bank of Japan will maintain its existing stimulus policy and optimistic economic view on when it meets on Thursday, sources say, preferring to take more time to gauge whether a run of weak data is sufficient to threaten a fragile recovery.
While the BOJ is likely to stick to its assessment that the economy is recovering moderately, pessimists on the board may propose offering a bleaker view on components such as factory output, say sources familiar with the bank’s thinking.
The BOJ cut its assessment on exports earlier this month to say they were “weakening” but left intact its view that factory output, while also weakening, continues to “rise as a trend”.
The recent run of weak data will be closely scrutinized at the BOJ’s two-day rate review that ends on Thursday.
Japan’s economy shrank at an annualized 6.8% in the second quarter, more than erasing a first-quarter surge in the run-up to the sales tax hike. Analysts polled by Reuters expect a 3.8% bounce this quarter.
Source: Reuters
