"It is unlikely we will see any further increase in the asset purchase program this year, as policymakers are in wait-and-see mode to determine the effects of past policy changes"
- David Rea, Japan economist at Capital Economics
The Bank of Japan is likely to expand its asset-purchase programme, as opposition's leader Shinzo Abe, which is expected to become the next prime minister, claimed his readiness to force the BoJ to buy the bonds from the government. Japanese central bank has already eased its monetary policy twice during the last two months by 21 trillion yen in order to boost economic growth, so that the world's third biggest economy would avoid the recession.
"It is unlikely we will see any further increase in the asset purchase program this year, as policymakers are in wait-and-see mode to determine the effects of past policy changes," David Rea, Japan economist at Capital Economics, wrote.
"We see a risk of investors being disappointed in the event the [Bank of Japan] takes no action," Nomura fixed-income strategist Naka Matsuzawa said in a note Monday. "The more his proposals look infeasible, the less investors are likely to pay attention to his position, thus limiting the extent that so-called ‘Abe trades' gain momentum."
The Nikkei 225 Stock Average stepped 0.12 per cent down, or 10.56 points, to 9,142.64. The broader Topix Index lost 0.02 per cent, or 0.12 points, to 762.04.
© Dukascopy Bank SA