Japanese economy contracted by a mild amount in Q3

Consensus thinks the Japanese economy contracted by a mild amount in Q3 following the sharper 1.2% contraction in Q2. Much of this is expected to be due to the tracking of softer business investment as consumption probably put in a little better quarter than in Q2. The GDP figures arrive on Monday and the Bank of Japan does not issue its updated policy assessment until the end of the week and also following the release of trade figures for October. While the BoJ has surprised in the past including the October 31, 2014 surprise stimulus announcement that was a very close vote,  it is unlikely to do so again - at least for now. 

Governor Kuroda has guided that he is looking through transitory headwinds operating against total CPI inflation and mainly in terms of lower energy prices. The BoJ is adding stimulus at the current pace of ¥80 trillion in annual purchases of Japanese government bonds, ¥3 trillion in ETFs and ¥90 billion in REITs. 

BoJ stimulus won't help growth remains intact as originally published here. Debasing the yen in an economy dependent on energy imports and other imports serves to cut consumer purchasing power. Absent the ability to borrow in a credit-constrained economy, and absent softening wage growth, consumers pay more for what they have to - rising import costs - by balancing their household budgets through spending less on everything else. 

"We expect the BoJ to stand pat and look to better likelihood of achieving its 2% inflation goal later next year", says Scotiabank.