BoJ unlikely to achieve inflation target of 2% by March 2017

Japan's Q3 GDP figure indicates the economy is in recession. A small positive signal for inflation rate is that GDP deflator increased to 2.0% yoy.

The Bank of Japan (BoJ) is unwilling to take a decision in favour of more expansionary monetary policy. It corrected its growth and inflation outlook downwards in the last meeting. Therefore, no analysts expected the BoJ to take action today. Market should wait and see the developments in USD-JPY once the Fed starts the normalisation of its monetary policy. 

"If the economy is now also flagging the small flicker of hope that its inflation target of 2% could be reached by March 2017 is dwindling even further. Even if it leaves everything unchanged at the moment, the BoJ will have to stand to attention", says Commarzbank.