Bank of Japan: further negative interest rate adjustments appear less likely - Wells Fargo

Analysts from Wells Fargo, see the  Bank of Japan keeping rates unchanged on Wednesday and the explain that recent comments leave the door open to an expansion of the purchase program.

Key Quotes:

"Despite three and a half years of quantitative and qualitative easing (QQE), and eight months of the negative rates, the Bank of Japan (BoJ) has had poor results. At its meeting next week, the BoJ will offer a “comprehensive assessment” of recent monetary policy.”

“Core consumer inflation is just 0.3 percent, and the headline number has been in falling-prices territory (deflation) for four straight months. Real GDP contracted in two out of four quarters in 2015 and was only barely positive (up 0.2 percent at an annualized rate) in the second quarter. BoJ Gov. Kuroda has argued that the shortcomings on the inflation front are the fault of things beyond the Bank’s control—like falling oil and commodity prices and tepid global growth, both of which have sapped inflation expectations.”

“Recent comments from Kuroda leave open the potential to expand the pace and scope of purchases although further negative interest rate adjustments appear less likely.”