(31 OCTOBER 2018)DAILY MARKET BRIEF 2:Japan hangs loose, yen strengthens

The Japanese economy is facing a difficult slowdown. So the Bank of Japan revised its estimates downward, starting with inflation: now not expected to reach the long-maintained target of 2% by year-end. Economic growth is now forecast at 1.40% (prior: 1.50%) and to weaken further when the country’s consumption tax rises from 8% to 10% by October 2019. Therefore, interest rates remained unchanged -0.10%. The BoJ will continue supporting the economy with purchases of Japanese government bonds at USD 710 billion per year. The Japanese yen is expected to strengthen today, approaching the 112.70 range.

By Vincent Mivelaz