"The BOJ sees European credit crunch as the biggest risk"
- Naka Matsuzawa, chief investment strategist at Nomura Securities
The Bank of Japan downgraded Japan's growth outlook but kept monetary policy on hold on Tuesday as strong yen and weak global demand weighed on exporters.
"The BOJ sees European credit crunch as the biggest risk," said Naka Matsuzawa, chief investment strategist at Nomura Securities in Tokyo. "It won't take further easing steps until the problem reignites."
"Market concern over Europe's debt woes has eased somewhat but uncertainty remains. With the crisis hardly over, the BOJ may ease again around spring depending on developments in Europe," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute in Tokyo.
"Japan's economy is in relatively good shape so the trigger for BOJ action will most likely be a renewed yen spike driven by developments overseas."
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