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20 May 2015
Expectations for further BoJ easing being pushed back – BTMU
FXStreet (Barcelona) - Reviewing the Japanese Q1 GDP data release, Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, further comments on the shift in market expectations for further easing by the BoJ.
Key Quotes
“The report revealed that economic growth accelerated to an annualized rate of 2.4% in Q1 up from a downwardly revised expansion of 1.1% in Q4 2014, it was the fastest quarter of growth since Q1 of last year. Nominal GDP growth was even more robust expanding by an annualized rate of 7.7% in Q1 which was the fastest rate of growth since Q3 2011. The GDP deflator accelerated to an annual growth rate of 3.4% driven by the decline in the import deflator resulting from lower oil prices.”
“The breakdown of growth revealed both stronger than expected private consumption and business investment. Private consumption and business investment growth both accelerated to an annualized rate of 1.4% in Q1. However, the overall growth rate was flattered by a large inventory build which added 0.5 percentage point helping to offset a -0.2 percentage point drag from net trade.”
“Overall the economic recovery following the sales tax hike induced recession from last year still remains relatively modest. The level of real GDP has yet to return to its level from the end of Q2 2013.”
“The latest Bloomberg survey results revealed overnight that expectations for further BoJ easing are being pushed back. The BoJ is still seen as most likely to expand easing again in October in line with our view, but nine out of thirty six economists polled by Bloomberg have pushed back the timing when they expect the BoJ to ease policy again since the last poll.”
“We continue to expect the US dollar to strengthen further against the yen in the year ahead.”
Key Quotes
“The report revealed that economic growth accelerated to an annualized rate of 2.4% in Q1 up from a downwardly revised expansion of 1.1% in Q4 2014, it was the fastest quarter of growth since Q1 of last year. Nominal GDP growth was even more robust expanding by an annualized rate of 7.7% in Q1 which was the fastest rate of growth since Q3 2011. The GDP deflator accelerated to an annual growth rate of 3.4% driven by the decline in the import deflator resulting from lower oil prices.”
“The breakdown of growth revealed both stronger than expected private consumption and business investment. Private consumption and business investment growth both accelerated to an annualized rate of 1.4% in Q1. However, the overall growth rate was flattered by a large inventory build which added 0.5 percentage point helping to offset a -0.2 percentage point drag from net trade.”
“Overall the economic recovery following the sales tax hike induced recession from last year still remains relatively modest. The level of real GDP has yet to return to its level from the end of Q2 2013.”
“The latest Bloomberg survey results revealed overnight that expectations for further BoJ easing are being pushed back. The BoJ is still seen as most likely to expand easing again in October in line with our view, but nine out of thirty six economists polled by Bloomberg have pushed back the timing when they expect the BoJ to ease policy again since the last poll.”
“We continue to expect the US dollar to strengthen further against the yen in the year ahead.”