"This is one of the most important monetary policy events for 2013"
- Bruce Kasman, New-York based chief economist at JPMorgan Chase & Co
After the two-thirds majority won by the Liberal Democratic Party in the lower house that allows them to take most of the decisions, the Bank of Japan signalled more stimulus. Japan's incoming Prime Minister Shinzo Abe said that the economic conditions in the next year will determine whether a planned sales tax rise will be implemented or not. The existing 5% tax is expected to double by 2015, while Abe also called for unlimited easing in order to spur the economy, which currently stands at 91 trillion yen ($1.1 trillion). Moreover, he pledged his readiness to double the BoJ's 1% inflation target to end more than a decade of deflation.
"This is one of the most important monetary policy events for 2013," said Bruce Kasman, New-York based chief economist at JPMorgan Chase & Co. "It could potentially be similar to the major change in U.S. monetary policy after the appointment of Paul Volcker."
"Japan's economy will probably see an uptick from around April to June as Abe focuses on short-term policies to support growth," said Kyohei Morita, chief economist at Barclays Plc in Tokyo. "The LDP may unveil between 5 trillion yen ($60 billion) and 10 trillion yen in spending as early as next month."
© Dukascopy Bank SA