"Keeping expectations high will be extremely difficult for Kuroda"
- Nobuyasu Atago, principal economist at the Japan Center for Economic Research
Sentiment among Japanese manufacturers improved last month, however, less than initially was predicted, putting more pressure on the Bank of Japan. According to the nation's central bank, the quarterly Tankan for large manufacturers stood at -8 in March, rising from -12 in December, while below analysts' forecasts of a -7 reading. Large firms claimed their readiness to reduce capital spending in the fiscal year that begins Monday by 2%, adding to weak domestic demand, even despite aggressive stimulus measures by the government and the central bank. During the policy meeting on April 4, the new Governor of the Bank of Japan is expected to announce more stimulus measures in order to boost growth and achieve 2% inflation target as soon as possible.
"Keeping expectations high will be extremely difficult for Kuroda," said Nobuyasu Atago, principal economist at the Japan Center for Economic Research in Tokyo and a former BOJ official. "The new central bank leadership will probably use the Tankan result as a reason to add monetary stimulus, as they'll argue that the BOJ shouldn't be throwing cold water on business confidence."
"The outlook for June is rosier than the March number as companies are expected to post bigger profits," said Takuji Okubo, chief economist at Japan Macro Advisors.
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