Nomura says BoJ decision riddled with problems

Bank of Japan and US Fed meetings that happened over this week. The US Fed was expected to stay pat and that is what it did. There is incrementally no news,here are two problems with Bank of Japan’s policy decision. 

 

BoJ has committed to overshooting the inflation target. It has instituted a bond yield target at about 0 percent. Again, I find it to be not useful, adding that BoJ is targeting the bond yield at a level higher than current market level. By signalling this, the BoJ is saying too low bond yields can be counterproductive. But according to common wisdom lower rates are good for the economy according to the condition both these meetings were lukewarm, counterproductive over the medium-to-long term.” Over the next three years, China over India as there are a lot of positive catalysts. But over six months to 10 months, India is a preferred market, given its fundamental growth. 

 

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