It always looked likely that the Bank of Japan would be forced to step up its pace of easing but the change of tack has come sooner than the market (or we) had expected. Given the recent downward trend in inflation, the Bank could well end up increasing its asset purchases again next year. Either way, the Bank’s demonstration of its willingness to act aggressively is likely to contribute to further yen weakness and Nikkei strength over coming months, in a continuation of today’s market moves.
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