4 Dec 2013
BoJ Sato waters down expectations of 'JQE2'
FXstreet.com (Bali) - While short term the BoJ will stand pat, there continues to be inevitable chatter about further ease coming down the pipe in Q2 2014, with the hot months being April to June. Today, BOJ board member - dissenter - Sato tried his best to lower any market expectations of more easing.
According to Sato: "There is no need to ease preemptively if economic impact of sales tax hike is temporary", adding that "BOJ has broken away from incremental approach since deploying QE in April."
He also said that "small diversions of economic, price outlook will not trigger further BOJ action.· Downside risks that may trigger easing, in view of Sato, refers to Lehman-scale tail risk.
Sato went on saying that "BOJ’s current QE is not kind of policy that can be continued for ever", and "do not expect sales tax hike to cause severe economic downturn." In the inflation outlook, Sato remains pessimistic, saying "hard to project inflation to continue sharply exceeding 1%."
According to Sato: "There is no need to ease preemptively if economic impact of sales tax hike is temporary", adding that "BOJ has broken away from incremental approach since deploying QE in April."
He also said that "small diversions of economic, price outlook will not trigger further BOJ action.· Downside risks that may trigger easing, in view of Sato, refers to Lehman-scale tail risk.
Sato went on saying that "BOJ’s current QE is not kind of policy that can be continued for ever", and "do not expect sales tax hike to cause severe economic downturn." In the inflation outlook, Sato remains pessimistic, saying "hard to project inflation to continue sharply exceeding 1%."