Japanese stimulus drives stock markets higher; eurozone inflation inches up - business live
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Version 0 of 1. 5.07pm GMT17:07 European markets end month on a high Days after the US Federal Reserve ended its QE programme, Japan stepped in and sent markets soaring by increasing its own bond buying plans, writes Nick Fletcher. So just a couple of weeks after markets were tanking on fears of a global economic slowdown, political tensions and fears of the spread of Ebola, a difficult month has ended on a positive note. The final scores showed: On Wall Street the Dow Jones Industrial Average is currently 172 points or 1% higher. On that note, it’s time to close up the blog for the evening. Thanks for all your comments, have a good weekend and we’ll be back on Monday. 3.03pm GMT15:03 Shares in Barclays have jumped nearly 8% to 239.9p and Royal Bank of Scotland has risen more than 6% to 388.6p after the Bank of England imposed less stringent requirements on how much capital banks must hold compared to their outstanding loans. My colleague Jill Treanor reports: George Osborne is calling on the Bank of England to consider the impact on lending to business and households as it toughens the regime to bolster the financial strength of the banking sector. The Bank of England wants major banks to be subjected to a regulatory regime intended to prevent them hiding the risks they are taking when granting loans to households and business. In a much-anticipated announcement, the Bank of England is requiring the biggest banks to hold 3p of capital for every £1 they lend out by imposing a 3% leverage ratio across the industry almost immediately. The leverage ratio – a way of measuring the financial strength of banks – does not allow banks to make assessments about the risks they face, unlike the capital ratios which allow an assessment of risk to be made. Threadneedle Street’s financial policy committee will consult next year to impose an even higher leverage ratio on the biggest banks – such as Lloyds Banking Group and Royal Bank of Scotland – which could push the level up to just above 4% from 2016. George Osborne, who had asked the FPC to conduct the review, said that he “fully accepts” the logic for an extra component to be added to the 3% level. But he said more work needed to be done on understanding what the impact might be on banks and large building societies. The full story is here: George Osborne questions impact of regulations from Bank of England 2.27pm GMT14:27 Afternoon summary: Japan's stimulus cheers the markets Time for a recap, after a rather busier Friday than usual.... World stock markets have surged after the Bank of Japan raised its monetary stimulus programme in a new attempt to drive inflation upwards. Bank of Japan governor Haruhiko Kuroda warned that Japan has reached a ‘critical moment’ in its battle against deflation, after announcing that the BoJ will broaden the monetary base by 80 trillion yen per year. The BoJ will also triple the amount of exchange traded funds (ETFs) and Japan real estate investment trusts it buys, and also buy more long-term Japanese government debt (the FT has a nice summary). The promise of more monetary stimulus has cheered investors around the globe. Europe’s indices are all sharply higher this afternoon, and Japan’s Nikkei earlier leapt by almost 5% to its highest level in seven years. And on Wall Street, the Dow Jones index has hit a new record intraday high in early trading. The move has also driven the yen down to seven year lows against the US dollar -- it has just hit the ¥112 to the $1 mark. Economists Sean Richards says the BoJ will welcome that move: As the yen nears 112 to the US $ then five members of the Bank of Japan Board can have a celebratory glass of sake http://t.co/LLIKscbjBf Jens Nordvig of Nomura says Japan’s move could calm fears that global central banks are “getting behind the curve”. He adds: And this chart shows how the BoJ’s stimulus measures have outpaced those of the ECB: Trick or treat from BoJ is a lesson for #ECB. But Draghi can only dream of moving like Kuroda. http://t.co/I0JITDP7mQ pic.twitter.com/NbHpETtnHz But the strengthening dollar has helped to push the gold price down to a new four-year low. Here’s our full story: Bank of Japan to inject 80 trillion yen into its economy In other news... The eurozone has moved a little further away from deflation, with the official ‘flash’ inflation reading rising to 0.4%, from 0.3% in September. Core inflation has fallen, though. And there’s no improvement in the labour market -- the unemployment rate remains at 11.5%, and rose to 12.6% in Italy. Russia has surprised the markets by hiking interest rate from 8% to 9.5%. But the move has not provided much support to the ruble, which has weakened against the US dollar again today. USD/RUB now on highs despite large rate hike from Russia - Russian central bank head is not amused pic.twitter.com/e0v5BT2l7N Canada’s economy has shrunk, with GDP falling 0.1% in August The UK has announced plans to recall and payoff some of its first world war debt.....and look who’s been tweeting about it: Just announced UK will repay part of remaining #WW1 debt. Lower interest rates on new debt thanks to credibility of #LongTermEconomicPlan We'll redeem £218m of 4% Consols, including debts incurred because of South Sea Bubble. Another financial crisis we're clearing up after... Royal Bank of Scotland has set aside £400m to cover likely fines for foreign-exchange rigging, and also revealed that it plans to shut over 150 branches: Royal Bank of Scotland earmarks 5% of branches for closure And shares in fashion retailer Supergroup are down 8% this afternoon after it warned that profits won’t meet expectations, as the warm weather deters people from buying new clothes.... 1.41pm GMT13:41 Trader Alert: DOW new historic high at 17,356, SP500 has 5.35 to go, heavy selling, markets fractionally off opening highs 1.41pm GMT13:41 Dow Jones hits intraday record high DING DING goes the Wall Street opening bell....and the Dow Jones industrial average has soared to a new all-time high. The S&P 500 is on track to hit its highest closing level ever. Japan’s decision to expand its stimulus programme (see opening post onwards for details and reaction) is cheering investors, helping ease the hangover caused by the end of the Federal Reserve’s QE programme on Wednesday. S&P 500 CLIMBS TO 2,012.36, SURPASSING RECORD CLOSING LEVEL BREAKING: Dow sets new all-time intraday high » http://t.co/GIDZuvFeUy Wall Street is following the lead set by Europe this morning, and the 4.8% surge on the Japanese Nikkei overnight. As David Madden of IG puts it: The Japanese central bank has taken the QE baton from the Fed and equity traders couldn’t be happier. Updated at 1.50pm GMT 12.44pm GMT12:44 Canada's economy suffers first contraction in eight months Canada’s economy has posted its first monthly contraction since the end of 2013, in a worrying signal for the G7 economy. Canadian GDP shrank by 0.1% in August, according to data just released, following an unchanged reading in July. It’s due to a 2.5% drop in oil and gas extraction; alongside falls in manufacturing and construction output. Canada Aug GDP -0.1%; manufacturing output decreased 1.2% and construction fell 0.5% after posting increases in July Canada GDP contracts (-0.1%) for first time in eight months in August 12.35pm GMT12:35 US economic data on the wires.... and it shows a surprise fall in spending, and a weaker-than-expected rise in earnings. Personal spending fell by 0.2% month-on-month in September, the first drop since January (economists expected a 0.1% rise) And personal income rose by just 0.2%, the smallest rise since December 2013 (economists expected a 0.3% rise). U.S. SEPTEMBER CONSUMER SPENDING FALLS 0.2%, INCOMES RISE 0.2% US Economic Indicators: Consumer spending down 0.2% in September, first drop in 8 months 12.32pm GMT12:32 Gold price hits four-year low Bad news for gold bugs (again) - the spot price of gold has hit a new four-year low of $1,162 per ounce. Japan’s stimulus boost is helping to drive money out of gold and into equities. 11.48am GMT11:48 In other news.. the UK is to redeem some of its legacy debt that helped to finance the first world war. The Treasury announced this morning that it has decided to redeem £218m of war debt. It is also considering repaying £2bn of war debt, as the recent falls in UK borrowing costs make it a profitable move. My colleague Julia Kollewe explains: “4% consols” was issued in 1927 by Winston Churchill, then chancellor, to refinance national war bonds originating from the first world war. The Debt Management Office estimates that the nation has paid £1.26bn in interest on these bonds since 1927. The national war bonds, which paid out a rate of interest of 5% initially (cut to 3.5% in 1932), were issued in 1917 as the government sought to raise more money to finance the ongoing cost of the first world war, which started with the issue of the first war loan in November 1914. The bonds were sold to private investors in 1917 with the advertisement: “If you cannot fight, you can help your country by investing all you can in 5 per cent Exchequer Bonds ... Unlike the soldier, the investor runs no risk.” These consols also include some debts dating back to the Crimea War, and losses incurred during the South Sea Bubble. More here: UK bonds that financed first world war to be redeemed 100 years later ITV News’s Joel Hills has blogged about the plan - here’s a flavour: In value terms the bulk of Britain’s First World War bonds are held by big City institutions, but over 100,000 War Bonds are worth less than £1,000 and are held by ordinary members of the public. In many cases these bonds will have been passed down through the generations. Their value has been slowly eroded by inflation (£100 in 1914 is worth around £3,000 now) and the returns today are almost derisory (a War Bond of £100 pays out £3.50 in annual interest). But I imagine the sentimental value is immense. Government looking at repaying the £2 billion Britain borrowed 100 years ago to fund the First World War. My blog: http://t.co/OqM0nODWSv Updated at 12.04pm GMT 11.37am GMT11:37 Advertising group WPP has warned that the eurozone economy remains tough. WPP CEO Martin Sorrell said this morning: “It’s going to be tough for Germany. Western continental Europe is not a pretty place at the moment.” He said he was “bullish” about China, WPP’s third-largest business, but warned: “If China sneezes we all catch a cold.” In the third quarter, the spread of Ebola in west Africa, the rise of Isis in the Middle East and the pro-democracy demonstrations in Hong Kong posed the greatest challenges, he said, eclipsing the Ukraine crisis which had worried people most in the second quarter. (with thanks to my colleague Julia Kollewe) 11.28am GMT11:28 Japan’s new stimulus plan is expected to send shares higher on Wall Street, when trading begins in two hours time... Futures are soaring this morning with the Dow set for a 170+ point gain at the open » http://t.co/ck4YGB5r00 pic.twitter.com/HnjmPnRYP6 10.56am GMT10:56 Russia’s surprisingly big rate hike hasn’t impressed the currency markets much -- the ruble is still down against the US dollar today, at 42.22 rubles to the $. 10.52am GMT10:52 #Russia's CB raises rates to 9,5%, GDP growth seen close to zero, inflation at 8.4%. Not a great picture for semi-god Vlad. 10.44am GMT10:44 Russian central bank hikes interest rates aggressively NEWS FROM MOSCOW: the Russian central bank has hiked interest rates sharply, from 8% to 9.5%. That’s a rather more aggressive hike than expected -- traders had anticipate a 50bp rise, to 8.5%. The Russian Central Bank says it took the decision in response to Russia’s high inflation rates, which is likely exceed 8% early next year. But it also warned that Russia’s economy is unlikely to grow much, at all, over the next six months -- even before today’s rate hike. 150BP?! Russky bazooka Updated at 10.48am GMT 10.32am GMT10:32 ..but drop in core €-inflation worries analysts Mario Draghi should put the party balloons back in the drawer. Although the headline eurozone inflation rate has risen to 0.4%, the ‘core’ inflation (stripping out volatile components such as food and energy) has fallen to 0.7% from 0.8%. Analysts at ING say that’s a worrying sign: ING: The low core inflation reading for October will reinforce concerns about deflationary risks in the eurozone + keeps pressure on the ECB 10.27am GMT10:27 Eurozone unemployment, the details: Today’s eurozone unemployment report confirms that there are still huge differences in labour markets across the single currency region. Eurostat reports that the lowest unemployment rates were recorded in Germany (5.0%) and Austria (5.1%). The highest rates, as usual, were seen in Greece (26.4% in July 2014) and Spain (24.0%). The rise in Italy’s jobless rate, to 12.6%, helped to dash hopes that the eurozone averae would fall from 11.5%. EZ unemployment at 11.5% as expected and unchanged .... looks like Italy and Germany roughly cancelled each other out for this. The scale of Europe’s jobless crisis remains stark. There are 24.512 million men and women out of work across the EU, with 18.347m based in the euro area. There has been some progress in the last year -- since September 2013 the unemployment rate has fallen in twenty-one Member States, increased in six and remained stable in Belgium. Eurostat says: The largest decreases were registered in Hungary (10.0% to 7.6% between August 2013 and August 2014), Spain (26.1% to 24.0%) and Portugal (15.7% to 13.6%), and the highest increases were registered in Finland (8.2% to 8.7%) and France (10.3% to 10.5%). Unemployment dropping in all EU countries not beginning with "F" pic.twitter.com/KU6faSM1VK 10.20am GMT10:20 So, why did eurozone inflation rise (slightly) this month to 0.4%? Eurostat reports that service sector prices rose by 1.2% annually in October (not September as I mistyped initially), up from 1.1% the previous month. Food, alcohol and tobacco prices also rose at a faster pace -- +0.5% this month, up from 0.3% in September. And the drop in energy prices has eased, to -1.8% year-on-year, from -2.3% a month earlier. This rise in inflation will be welcomed in the European Central Bank, but it is still well below the ECB’s target of almost 2%. (larger versions of these charts are online here) 10.06am GMT10:06 Today’s rise in eurozone inflation shows that the region will avoid full-blown deflation, reckons Frederik Ducrozet of Credit Agricole. Eurozone inflation: the beginning of a very slow grind higher. 10.02am GMT10:02 Euro inflation rises to 0.4% Eurozone inflation has risen, slightly, but remains uncomfortably low. The euro area consumer prices index inched up to 0.4% in October, up from 0.3% in September. Euro area annual inflation up to 0.4% - bang in line with expectations. Shock: EZ inflation goes up! 0.4% on yr in Oct vs 0.3% in sept. Updated at 10.12am GMT 10.00am GMT10:00 Euro jobless rate unchanged at 11.5% BREAKING: The eurozone unemployment rate was stable in September at 11.5%, unchanged compared to August. 9.58am GMT09:58 Back to the main story of the morning (so far....), Japan boosting its stimulus programme. J.P. Morgan Asset Management Chief Investment Officer for Fixed Income, Nick Gartside, says the move shows that the days of central banks taking unorthodox steps to stimulate their economies isn’t over: “With the two year anniversary of Abenomics approaching, and growth and inflation faltering, the strong and decisive action from the Bank of Japan shows that it is not just the ECB that will ‘do whatever it takes’. For central banks, with monetary policy at the zero bound, there is no Plan B. Depending on the evolution of economic growth and inflation from here, the risk remains that we see more (rather than less) easing.” Japan gross household real income fell 6% in September. pic.twitter.com/NoY9y8A1LA Updated at 9.59am GMT 9.53am GMT09:53 Heads-up.... we get the overall eurozone unemployment, and inflation data, in just under 10 minutes. Economists had hoped that euro area CPI would rise to 0.4%, from 0.3% last month -- but that was before surprisingly weak German price data yesterday. Then, at 10.30am, the Russian central bank announces its latest monetary policy decision -- and it could well raise interest rates to support the ruble... Russia central banks decision in 45'. Trader: "The market is set up for something big either way. The CBR better not disappoint." 9.49am GMT09:49 What to do when world's biggest QE program doesn't work? Ramp it up of course! Good luck BoJ. http://t.co/ISAyAr50Ef pic.twitter.com/9OBuJrXIc9 9.26am GMT09:26 And here’s a handy chart from fastFT, showing that Italy’s unemployment rate is back at its eurozone-crisis highs: Updated at 9.40am GMT 9.20am GMT09:20 Italian unemployment rate jumps unexpectedly The economic malaise in Italy has deepened, with the unemployment rate jumping unexpectedly last month. Data just released by the country’s statistics body, ISTAT, showed that the jobless rate rose to 12.6% in September. This matches levels last seen in the 1970s, according to Reuters data. ISTAT reported that: In September 2014 22.457 million persons were employed, +0.4% compared with August 2014. Unemployed were 3.236 million, +1.5% with respect to the previous month. August’s unemployment rate has also been revised higher, to 12.5% from 12.3% originally. There’s slightly better news on youth unemployment -- the jobless rate for 15-24 year olds has dropped by 0.8 percentage points, but is still far too high at 42.9%. This bodes badly for Italy’s hopes of avoiding a new recession. Reminder: we get the overall eurozone unemployment rate in around 40 minutes.... Italy unemployment rises to 12.6% v 12.4% expected .... yuck. A tale of two Europes - figures today show Italian unemployment at 12.6%, Norwegian unemployment 2.7%. 9.05am GMT09:05 So a mere 35 hours after many declare the end of #QE the Bank of Japan declares "I'm Back" just like Arnie as The Terminator! #Abenomics 9.02am GMT09:02 Shares in SuperGroup have slumped by 10% this morning, after it issued a profit warning and blamed warm autumn weather (more details here). 8.58am GMT08:58 The picture is no better in Germany either -- retail sales there slumped by 3.2% in September, compared with August. That’s the biggest fall since May 2007. More details here. 8.47am GMT08:47 Gloomy news from France this morning -- consumer spending fell by 0.8% month-on-month in September, with households reining in their spending on clothing. France data : Dreadful France data - consumer spending drops -0.8% in Sep vrs -0.3% expected .... the y/y rate is 0.2% v 0.9% expected. 8.44am GMT08:44 BoJ governor: Deflation battle has reached a critical moment Bank of Japan governor Haruhiko Kuroda has warned that Japan’s battle against deflation has reached a ‘critical moment’. He was speaking at a press conference in Toyko, explaining why BoJ policymakers voted to boost their stimulus programme. I’ve taken some key quotes off Reuters: Kuroda said: “Now is a critical moment for Japan to emerge from deflation. That’s why we expanded QQE.” “Today’s step shows our unwavering determination to end deflation.” “Opinion emerged from the board that we should expand QQE in the process of discussing our semiannual report ... The board was split with some doubting whether it was appropriate to take (additional easing) steps now.” “This is a pretty drastic step, so I think there will be a significant effect (on the economy). We don’t think there is an immediate need to do anything further ... but we will make necessary policy adjustments looking at upside, downside risks.” “For now, I think we’ve done enough to respond to risks.” Kuroda also channelled Mario Draghi, his counterpart at the ECB, when discussing inflation expectations, saying the BoJ would do ‘whatever it takes’ to get the public’s inflation expectations up. “Japan is different from countries like the United States, which has inflation expectations anchored at 2 percent. Actual price moves have a big impact on inflation expectations. If actual price rises slow, it hurts momentum. There was a risk that despite having made steady progress, we could face a delay in eradicating the public’s deflation mindset.” “It’s important for the BOJ to strongly commit to achieving its price target to get its price target firmly embedded in people’s mindset. “We’ve pledged to do whatever it takes to achieve our 2 percent inflation target at the earliest date possible.” “It won’t do much good in trying to shake off the public’s deflation mindset if you just say inflation will reach 2 percent some day. We expanded QQE to pre-empt risks.” 8.28am GMT08:28 Marc Ostwald, economist at ADM Investor Services, reckons the decision to beef up the BoJ’s monetary expansion to 80 trillion yen per year, up from ¥60-70bn before, is a ‘desperate’ move. Financial markets will “certainly welcome the BoJ ostensibly stepping into the QE void left by the Fed”, he adds. #japan 1) BoJ moves can only be described as desperate, and sits uncomfortably with modest downward revisions to the BoJ's CPI & GDP f'casts Updated at 8.29am GMT 8.26am GMT08:26 The people happiest today will be those convinced that central banks are all in cahoots together to keep 'inflating mkts'. 8.24am GMT08:24 Details of this morning’s rally in Europe: 8.08am GMT08:08 FTSE 100 surges on back of Japan stimulus The London stock market has opened, and shares are surging as investors welcome the news that Japan’s central bank has boosted its stimulus plan. The FTSE 100 jumped 85 points at the open, with almost every share gaining ground. That’s a 1.2% gain, to 6549 points. Other European markets are rallying -- the German DAX, French CAC and Italian MIB all jumped at least 1.8%. Updated at 8.08am GMT 8.02am GMT08:02 The Bank of Japan has also halved its growth forecasts for this financial year. It now expects growth of just 0.5% in the year to March, down from 1.0% three months ago. 7.58am GMT07:58 The BoJ got the timing of today’s surprise stimulus boost just right, reckons Eric Burroughs of Reuters, as the markets were adjusting to the end of America’s QE programme. Pretty cheeky of Kuroda, yet again playing on lack of/low expectations and timing it with shift at Fed for maximum impact 7.48am GMT07:48 FTSE 100 forecast to start +70 at 6534 after Bank of Japan surprise move. 7.48am GMT07:48 SuperGroup: warm weather has hit sales Another morning, another profit warning from a UK retailer. This time it is SuperGroup, which has warned investors that the unseasonably warm autumn has hit its sales. It says: As widely reported by other retailers in the apparel sector, after a strong start to the quarter, September and October have both seen an exceptional period of warm weather across the UK and the rest of Europe which is expected to continue into November. It admitted that like-for- like sales fell by 4.2% in the last quarter, “although performance has been much more difficult in later weeks”. Supergroup now expects profits of £60m to £65m this year, down from around £69m to £73m. Updated at 7.50am GMT 7.39am GMT07:39 RBS sets aside £400m for FX rigging In other news... Royal Bank of Scotland has just become the latest bank to make provisions for a fine over the foreign exchange-fixing scandal. RBS is setting aside £400m to cover the cost of the on-going investigation into the £3.5tn a day FX market. Investigators believe some currency traders have conspired to rig the daily ‘fix’ -- the official rate at which currencies trade against each other. RSB is also putting aside another £100m to cover compensation payments to customers missold payment protection insurance (PPI). RBS latest bank to make provision for forex: £400m. And more for PPI: £100m RBS is holding a press conference now: "Some of the bills are already in the post" says RBS boss Ross McEwan in reference to up-coming fines Updated at 7.50am GMT 7.32am GMT07:32 More reaction to the BoJ’s move: Aggressive move by the BOJ this morning. Perhaps policymakers are reconsidering implementing the second half of the scheduled sales tax. BoJ, Fed, BoE all done several rounds of QE. The ECB will follow, even if they don't want to. The big boys have probably already decided it. 7.30am GMT07:30 7.18am GMT07:18 Japan boost monetary stimulus: What the experts say Financial experts are scrambling to react to the surprise news that Japan will launch a more aggressive stimulus programme. Junko Nishioka, chief economist at RBS Securities Japan, says (via Reuters): “It was a total surprise that the BOJ eased further at this time given that BOJ executives have not voiced such pessimistic views lately. The move was apparently made in response to underlying weakness in prices.” Takeshi Minami, Tokyo-based chief economist at Norinchukin Research Institute, reckons the BOJ’s move should allow prime minister Abe to push on with his unpopular sales tax hike: Governor Kuroda couldn’t be bullish anymore -- inflation has slowed to 1 percent and oil prices are going to weigh on prices,” “Kuroda also thought about Abe’s decision on the sales tax. He really didn’t want Abe to postpone it.” Kit Juckes of Societe Generale says the move smacks of panic: More BOJ QE has whiff of panic. Yen down, of course, but more widely the contrast with QE-ending Fed is sending $ up across the board. Peter Thal Larsen of Reuters is also struck by the timing, given the Federal Reserve has just stopped its own bond-buying programme: Two days after the Fed stops easing, Bank of Japan boosts monetary stimulus. #QE4EVA. Michael Hewson of CMC Markets reckons European investors will cheer the move: Asia stocks surged overnight and the resultant rally is likely to filter through to European markets this morning as investors cheer a further bout of monetary largesse, as the stimulus jamboree continues. And here are CMC’s early calls: Updated at 7.40am GMT 7.07am GMT07:07 Nikkei hits seven-year high There was euphoria on trading floors across Tokyo after the Bank of Japan announced it will extend its stimulus programme: The Nikkei surged by 4.8%, its biggest daily rise in over a year, to close at 16,413 points; a level last seen in November 2007. Updated at 7.17am GMT 7.00am GMT07:00 Yen hits seven-year low The new Japanese stimulus plan has send the yen tumbling to a seven-year low. It slumped to as low as 111.22 yen to the US dollar, the weakest level since 2007. That’s likely to cheer the Bank of Japan, as a weaker yen should push inflation up. Yen hits 110 against the dollar, its weakest level since 2008: pic.twitter.com/VY5gNF6Dgc 6.54am GMT06:54 Bank of Japan expands monetary stimulus Good morning. Big news from Tokyo - the Bank of Japan has bowed to pressure and extended its stimulus programme in a renewed bid to stave off deflation, stunning the markets. BoJ policymakers agreed (narrowly) to buy more assets with newly created money. They will now aim to widen Japan’s monetary based by 80 trillion yen per year, up from the ¥60t-70 trillion level previously targeted. They will also buy more riskier assets, including funds traded on the stock markets. The BoJ acted after inflation data, released overnight, showed Japan’s consumer prices index had fallen for the second year running. Concern was growing that Japan’s bold bid to stimulate inflation and revive the economy was faltering, nearly two years after prime minister Shinzo Abe and BoJ governor Haruhiko Kuroda had launched radical action. In a statement, the BoJ said: Japan’s economy has continued to recover moderately as a trend and is expected to continue growing at a pace above its potential. However, on the price front, somewhat weak developments in demand following the consumption tax hike and a substantial decline in crude oil prices have been exerting downward pressure recently. If the current downward pressure on prices remains, there is a risk that conversion of deflationary mindset, which has so far been progressing steadily, will be delayed. Today’s action is a real surprise, sending shares soaring on the Japanese stock market and weakening the yen. And the BoJ was split over the decision - voting 5-4 in favour: Impressed that Kuroda is willing to push through more easing with just a 5-4 majority. That’s how you do it. But will it work, or are Japan’s economic problems too deep-rooted for monetary policy, however innovative and bold, to fix? I’ll be tracking the best reaction and analysis, along with other news from the financial markets, the world economy, the eurozone and business through the day.... Also coming up today: Updated at 7.04am GMT |