• Bank of Japan (BoJ) did not announce any new measures to stem the volatility in financial markets and, by not mentioning the volatility in financial markets in the statement, it appears that BoJ does not regard the recent correction in the financial markets as a threat to the recovery.
• It also appears that BoJ wants to avoid the ‘incremental’ monetary easing that characterised BoJ under the leadership of Shirakawa. Instead, the strategy under Kuroda’s leadership is now massive easing with less fine tuning.
• It is important to understand that despite no announcement today, BoJ is still easing aggressively. A massive amount of liquidity will continue to be injected into the economy over the coming months and monetary easing is still at an early stage. Relative monetary policy should continue to favour a weaker JPY.
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Danske Bank