- Kyohei Morita, chief Japan economist at Barclays Capital
Perhaps we should just ease pressure on Haruhiko Kuroda and his team and let us wait for more indicators? Analysts all over the world have been claiming the BoJ should inject more stimulus as April's tax hike will become a major drag for the world's third largest economy. Moreover, under this pressure even the Governor claimed that there is always a possibility to add stimulus even with rates at zero. Moreover, the latest fundamentals have been stronger than experts believed.
Additional prove Abenomics have provided a solid and log-term boost to the economy was unveiled on Monday, with several reports pointing at resilient domestic demand. First of all, the Automobile Dealers Association and Japan Mini Vehicle Association said that the nation's automobile sales plunged in May by less than it was originally expected, meaning concerns about tax hike's impact on consumer spending were overblown. Vehicle deliveries fell 1.2% in May to 363,370, improving from April's 5.5% drop. Additionally, the Ministry of Finance said that Japan's companies increased capital spending in the first three months of 2014 jumped 7.4%, topping expectations for a 5.7% increase and accelerating from 4.0% a quarter earlier. What is more important, companies reported a 20.2% surge in profits, while sales added 5.6% over the period. It may seem that the increase in all sectors was provoked only by the boost ahead of the tax hike, however, it was stronger than expected.
© Dukascopy Bank SA