Weakening inflation expectation may give BOJ scope for further easing

Tokyo

THE Bank of Japan's (BOJ) Policy Board voted on Thursday to leave monetary policy unchanged despite the fact that the world's third-largest economy slipped back into recession during the third quarter of 2015 for the second time in the space of one year, core consumer price inflation is zero and inflation expectations appear to be weakening.

But by adding the words "some (price) indicators have recently shown relatively weak developments" in its post-meeting statement, the Policy Board appeared to hint at the possibility of further monetary easing in the fairly near future. This, together with rising market confidence that the US Federal Reserve will end uncertainty by raising short-term interest rates modestly next month, helped p…