Japan: Is This The Beginning Of The End?

Last week, the Bank of Japan (BoJ) policy board decided to employ extreme measures in a bid to stoke inflation, as demanded by Prime Minister Shinzo Abe. With unanimous support to double the monetary base in two years, we believe the central bank has demonstrated that it will employ all its tools to achieve inflation, and that it is likely to ‘succeed’. However, we maintain our view that inflation will not be beneficial to the Japanese economy, and we believe that the latest steps of debt monetisation are likely to hasten the arrival of a debt crisis.

We outline the reasons for this in more detail in Business Monitor Online.