BoJ under pressure as retail sales continue to decline

Japan's December retail sales dropped more than expected, suggesting slow economic growth in the fourth quarter due to sluggish household spending. While the markets expect further monetary easing from the BoJ, the downbeat data will put further pressure on the policymakers to turn around weak economic recovery.

According to data ministry, December retail sales dropped 1.1 percent y/y recording its second straight decline in months, above markets forecast of a 0.1 percent decline.

A sluggish EM demand and slow wage growth continues to weigh on exports and private consumption, further suppressing the economy's growth. The current financial market turmoil has tightened pressure on the BOJ to expand its monetary stimulus; however, most of the central bankers do not expect the central bank to ease its policy as they perceive that the Japan's economy is likely to recover moderately.