Salient to Investors:
Bruce Kasman at JPMorgan Chase believes next year’s replacement of BOJ officers will be one of the most important monetary policy events for 2013, akin to the appointment of Paul Volcker. Kasman says we have not yet seen an aggressive and committed effort to end deflation. JPMorgan expects Japan to increase growth to 0.4 percent in 2013 on fiscal stimulus pledged by Abe.
17 of 21 analysts expect the BOJ to ease this week.
Japan’s entrenched deflation helps retirees preserve wealth, while younger generations are hurt by falling wages and diminished incentives for borrowing crimp growth.
Masayuki Kichikawa at Bank of America Merrill Lynch said the most important lesson Abe learned was that the economy matters for his popularity – pressuring the BOJ may be the easiest solution for now. Hiroshi Miyazaki at Shinkin Asset Mgmt said there is a limit to what monetary policy can do. Kazuhiko Ogata at Credit Agricole said Abe has rock-solid determination to push the BOJ for more stimulus.
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