Intra-Day Market Moving News and Views
28 Jul 2016 01:11GMT
USD/JPY - ...... Reuters reported this morning that in the wake of premier Shinzo Abe's announcement of a bigger-than-expected fiscal spending package, economy minister Ishihara was quoted as saying that the government and the Bank of Japan must work together to support the economy.
The remark suggests the earlier-than-expected announcement of Abe's economic package on Wednesday was an attempt by the government to pressure the BOJ into expanding monetary stimulus at a two-day rate review ending on Friday.
Abe unveiled a surprisingly large 28 trillion yen ($267 billion) stimulus package on Wednesday to reflate the economy, sending Japanese stocks higher and weighing on the yen.
Many BOJ policymakers prefer to hold off on easing on Friday, worried about the rising costs and diminishing returns of an already massive asset-buying programme that is drying up bond market liquidity.
But Ishihara's remarks suggest that political considerations may nudge the BOJ into action, even as the central bank struggles to beat economic headwinds with its dwindling policy tool-kit.
Finance Minister Taro Aso had also told reporters on Tuesday that he hopes the BOJ continues to do its utmost to beat deflation, signalling his hope of additional monetary easing.
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