Governor Shirakawa’s caution is not the last word

The Bank of Japan meeting which concluded today was the non-event that most (ourselves included) had anticipated. Governor Shirakawa reiterated the Policy Board’s reluctance to adopt a more formal inflation target or to increase outright purchases of JGBs. Nonetheless, we continue to expect further monetary stimulus later this year as the recovery begins to slow, with no end to deflation in sight.

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