As expected, Bank of Japan (BoJ) was on hold in connection with its meeting this morning, meaning that the target for the annual expansion of the monetary base remains JPY80trn.
Despite Japan entering a technical recession in Q3 there was no changes in BoJ's view on the economy. It still sees the 'economy recovering as a trend' and it also expects the economy to continue to 'recover moderately'. Data like retail sales and domestic machinery orders suggest that the Japanese economy started to recover in Q3 but it is still a bumpy road for, in particular, industrial production. The statement was softer on inflation noting that 'if the current downward pressure on prices remains, there is a risk that the conversion of a deflationary mindset might be delayed'. However, the statement also said that BoJ had pre-empted this risk by easing at its previous meeting.
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