- BoJ
Vast majority of analysts believe the Bank of Japan will continue its money printing extravaganza soon, as economy is projected to lose some momentum due to the latest sales tax hike. Moreover, the BoJ reported that the stimulus is working and the money is spilling over into the broader economy, as more than 90% of domestic banks have increased its loans and investment in riskier assets during the last year. Bank lending soared 2.1% in March on a annual basis, posting 29th straight monthly increase, while investment in 10-year government bonds climbed only 0.6%, meaning banks are willing to invest in more riskier assets, as they are getting more confident.
The Bank of Japan, however, cannot announce fresh stimulus not now not any time soon. The main reason is the fact the Group of 20 counterparts might not welcome such a move. Fed's Chairman Janet claimed that after the Fed started to abandon its QE, the BoJ should curtail their stimulus as well. Yellen claimed she understands the Japanese central bank is using their monetary policy to devalue the exchange rate of the Yen in attempt to maximize exports and push imports lower. At the same time, she warned that Japan's manipulation of its currency is a boost to a trade war with the world's second largest economy, China, and potentially it can turn into a real war. Moreover, BoJ's purchases of government bonds and risky assets will negatively affect global markets.
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