"If the government policy for the growth strategy and accompanying measures in the private sector are delayed, and the strengthening of growth potential does not proceed, it is possible that the achievement of the price stability target will bring about an economy with low real growth rates under mild inflation,"
- Bank of Japan Deputy Governor Kikuo Iwata
The Japanese Yen is still climbing higher. The currency gained around 0.20% over the last five trading days, while during the last month the Yen appreciated 0.75% versus the basket of other major currencies. It seems that investors have already lowered their easing expectations to almost zero, as even fresh stimulus hints were not able to stop currencies' appreciation and a move back to 102-mark can be only a pullback.
The latest minutes showed the Bank of Japan appears to become more confident of achieving the 2% inflation target, however there is still a continued minority that disagree concerning growth and inflation outlook. Moreover, central bank's Deputy Governor Kikuo Iwata claimed that the government and business leaders should do whatever it takes to boost economy's potential through innovation and deregulation, while the central bank will proceed with its aggressive stimulus programme. Iwata claims that structural reforms will push the potential growth rate higher, however, also claimed that it can put some downward pressure on prices. This comments as well as BoJ's obsession with the 2% target are suggesting that even a slight risk of missing the target will force Kuroda to pull the trigger. This week the Statistics Bureau will unveil inflation figures for April– the first month after the tax hike. While the indicator is expected to improve over the period, any miss of the consensus will provoke a massive sell-off in the Yen.
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