Chances of near-term easing by the Bank of Japan have diminished

The 0.6% q/q increase in Q1 GDP was stronger than expected, but largely the result of an outsized 0.5 ppt boost from stockbuilding. 

Admittedly, Wednesday's figures suggest that the chances of near-term easing by the Bank of Japan have diminished. But with price pressures likely to remain subdued, more stimulus will be needed before too long, with the Oct meeting now the most likely venue. 

"Looking ahead, a range of indicators point to a slowdown in Q2, and we stick to our forecast that Japan's GDP growth will be close to zero this year, well below the consensus estimate of a 1% rise, before picking up to 1.5% in 2016 as consumers bring forward spending ahead of the 2017 sales tax hike." says Capital Economics