-Barclays
Minutes of the Bank of Japan's July monetary policy meeting revealed there was some disagreement on the central bank's assessment of inflation expectations. One member of the BoJ board was not convinced that inflation expectations were rising from a longer term perspective. Since the beginning of the year, consumer prices in Japan has been around zero, well below the central bank's target of 2%, fuelling speculation that the BoJ may expand its monetary easing programme this year. Meanwhile, Japanese experts are sharply downgrading their economic growth outlook for the year amid expectations that business activity contracted in the three months through June. Currently economists expect the world's third biggest economy to expand 1.21% in the year to March 2016, compared with the 1.66% growth predicted in the preceding month. The Japanese economy likely shrank an annualized 1.9% in April-June due to sluggish exports and household spending, a sharp reversal from a 3.9% expansion in the first quarter. The official data is due next week.
BoJ policy makers fear that Japanese exports may be hurt if China's growth slows further. The central bank believes that overseas economies would continue to recover and Japan stay on track for a moderate growth. However, emerging economies would continue to lack momentum due to slowing demand from China.
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