"People have been deceived by ‘Abenomics. Monetary easing is not working, and it's going nowhere. There is no demand for funds on the part of businesses. That's why the monetary easing is not working."
- Yukio Noguchi, a prominent economist and adviser to Waseda University's Institute of Financial Studies
The Japanese Yen fell on Monday, hitting almost a four-year trough against the single currency, amid upcoming central bank gatherings all over the world. Though the Bank of Japan is likely to maintain its ultra-loose monetary policy on Thursday, Kuroda may reassess his approach towards inflation and say when the U.S. tapering would affect the world's third largest economy. Even despite weak third quarter GDP data many board members expect the Japanese economy to keep gaining momentum, on the back of strong consumer spending in the run-up to April's hike in the consumption tax. On the other hand, amid subdued exports and grim outlook for overseas economies, the BoJ is seen holding off on raising its growth outlook. As the economy lost steam in the third quarter, some of the members are starting to express their concerns that Japan may not see 2% inflation in two years. This fact keeps alive market speculation of additional stimulus measures from the BoJ sometime next year, meaning the Yen could fall even further.
There are growing signs of inflation in Japan; however, Abenomics are allowing the debt-ridden government to issue more bonds constantly, adding to concerns of a fiscal crisis. Analysts are warning that Shinzo Abe's government is walking a narrow path of trying to boost growth, while also seeking to prevent interest rates from surging at the same time.
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