Japan likely to introduce fiscal stimulus package

May 23, 2016

During the upcoming G7 summit in Japan on 26-27 May, Japan is likely to lead the flexible fiscal policy management, said Barclays in a research report. Japan’s public sector expenditure is likely to be normal again post three years of strong investment after the Tohoku earthquake.

Meanwhile, the consumption tax is set to be raised in FY 2017. The combination of both might set off a contraction in fiscal policy in FY 2016 and FY 2017, as seen in 2012 “fiscal cliff” in the US, noted Barclays.

Japan is likely to bring in a fiscal stimulus package to avert this. The package will be financed by a range of supplementary budgets and a delay in the hike of consumption tax. The forthcoming G7 summit might give the appropriate setting for Japan to announce such plans and also look for international coordination of fiscal policy, according to Barclays.

Moreover, the Bank of Japan is likely to further ease monetary policy. With the BoJ’s limited scope in terms of additional easing, there is a possibility of incremental action, added Barclays.

“At the July MPM, we expect the BoJ to pursue additional qualitative easing via an expansion of ETF and J-REIT purchases and a deepening of NIRP to -30bp from -10bp currently”, said Barclays.

It is unlikely that inflation expectations will rise significantly from these measures and hence see a threat that the Japanese central bank might undertake measures more aggressively than expected.

Publication source
Vinson Financials Ltd information  Vinson Financials Ltd reviews

September 30, 2016
The OPEC greases the wheels for oil
The global equities rally led by the gains in the energy sector after the OPEC members cut a deal in Algiers, despite the market scepticism and repeated statements that the Oil officials in Iran and Saudi Arabia are not able to find a middle ground in the current conditions...
September 30, 2016
Opec deal no certainty
In a huge surprise to the market, members of the Opec cartel agreed to cut production by as much as 700,000 barrels a day with some predicting that this may be the start of a new upward trend for oil...
September 30, 2016
Brent futures consolidated their gains
Brent rose in the European session after a surprised OPEC decision to cut oil output. Moreover, a draw in U.S. crude stocks gave an additional support for oil prices...

FOREX.com Rating
XM Rating
FBS Rating
FXCM Rating
OANDA Rating
Fort Financial Services Rating

OptionRally Rating
365BinaryOption Rating
TropicalTrade Rating
OptionTrade Rating
TopOption Rating
IQ Option Rating