- Yoshimasa Maruyama, chief economist at Itochu Corp.
Japanese central bank, which is projected to keep the pace of annual stimulus injections at 60-70 trillion yen in order to double the monetary base and weaken the Yen, is likely to announce another bold measure soon. According to a poll conducted by Bloomberg, the Bank of Japan will double its annual purchases of exchange-traded funds to 2 trillion yen in months ahead. At the same time, the expansion of annual bond purchases by at least 10 trillion yen can be made in July, as analysts consider this month a perfect timing. Despite being confident in reaching a 2% inflation within the two years, rising inflation expectations can restrain more ambitious plans like an open-ended ETF purchases, even despite obvious signs of economic slowdown. Shinzo Abe's Abenomics helped to weaken the Yen by 5.5% versus the Dollar last year, fuelling inflation even despite the fact the government bond yields remain at the lowest level in the world, with rates at 10-year at 0.64%.
Another survey showed that in attempt to catch up with the U.S. Federal Reserve, the BoJ will boost its monetary base by more than 50% by the end of the next year. By the end of 2015 the amount of currency in circulation will reach 340 trillion yen, up from 220 yen last month. It means such a measure will close a gap with the $3.91 trillion in the world's largest economy. Moreover, it was confirmed by the RBA's Stevens, who expects the BoJ will outpace the Fed soon.
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