A rise in USD/JPY beyond 125 before next July's would become a political problem

11.12.2015 / 03:22

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Japan economists expect the Bank of Japan to add further monetary easing at the January meeting.

The BOJ meet next week (December 17 and 18), the January meeting is on the 28th and 29th.

Economists reasoning, BoJ to implement further easing given the current stagnant state of the Japanese economy and inflation. The government will enact the supplementary budget immediately after the session starts on Jan 4. They believe the Jan 28/29 meeting of the Monetary Policy Board will be the best timing for the BoJ to take an action.

Expectations for additional easing to consist of a JPY 1tn per month increase in JGB purchases and a JPY 2tn per year increase in ETF investments.

If USD/JPY goes well beyond 125 before the Jan 28/29 meeting, the BoJ may choose ETF purchases only. A rise in USD/JPY much beyond 125 before next July's Upper House election would even become a political problem

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A rise in USD/JPY beyond 125 before next July's would become a political problem

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