More easing later this year?

While the Japanese Yen was trading higher on Monday amid risk aversion on the financial markets that was caused by weak stocks, more trouble for the Yen and Japanese economy in general can come later this year. It was expected that Japan will post a bunch of stronger-than-expected fundamental data before April, as consumers and companies should be willing to spend more before they will be charged more for the same goods and services. Nevertheless, the recent data surprised markets to the downside. 

There are concerns the world's third largest economy will be dragged into another recession by the upcoming sales tax hike, Shinzo Abe is waiting for more economic data due this summer before considering whether to ease policy further, however already now economic forecasts are in jeopardy. Earlier this year analysts have expressed their concerns the BoJ will ramp up its unprecedented stimulus programme in April– the same month as a year earlier, comments from central bank's board member Yoshihisa Morimoto are diminishing the chance the Yen will plummet against other major currencies in April. On April 1 the consumption tax will be increased to 8% from 5%, and after collecting fundamental data Abe will decide whether to proceed with a planned second adjustment– to 10%. The decision on October 2015 tax increase is excepted to be made later this year.