Despite promising more QQE if necessary (having said that more asset purchases threaten the nation's central bank's balance sheet just a week ago), it appears BoJ Governor Kuroda's comments on inflation expectations and oil prices have stalled the exuberant "global stimulus" rally (albeit briefly).
Kuroda muttered the following:
- *KURODA: TIMING OF REACHING TARGET DEPENDS ON OIL PRICES
- *KURODA: BOJ'S FOCUS IS THAT 2% TO BE REACHED IN 2H OF FY2016
- *KURODA: PROLONGED OIL-PRICE DROP COULD AFFECT INFL EXPECTATIONS
- *KURODA:COULD REACH 2% TARGET EARLIER OR LATER, DEPENDS ON OIL
Which appears to have stalled the stimulus rally as tying Japanese monetray policy to oil prices appears to imply hopeful expectations of higher oil prices mean less QQE going forward...
And this did not help "hope" for stimulus:
- *KURODA: WE DON'T THINK CURRENT MARKET HAS AFFECTED COS MUCH
Which pushed USDJPY lower... (and therefore crude and stocks)
But as USDJPY started to tumble he managed a quick rescue, by promising moar...
- *KURODA: IF NECESSARY TO REACH TARGET, BOJ CAN EXPAND QQE
- *KURODA SAYS THERE ARE MANY WAYS TO STRENGTHEN QQE PROGRAM
And then dropping this idiocy...
- *KURODA: 2/3 OF GOVT BOND MARKET STILL NOT YET BOUGHT BY BOJ
- *KURODA: NOT FACED WITH TECHNICAL LIMITATION TO POLICY NOW
However, The IMF disagrees:
"at the current pace, the BOJ will hold about 40 percent of the bond market by end-2016 and close to 60 percent by end-2018." - IMF
And Kuroda ended with this:
- *KURODA SAYS `I AM ALWAYS CAUTIOUSLY OPTIMISTIC'
- *KURODA: NEXT YEAR WILL BE MUCH BETTER, OR AT LEAST BETTER
Or a lot worse?