Takahide Kiuchi, a former Nomura Securities economist who was appointed to the BoJ policy board in July said recently that after almost two years “of monetary easing centered on asset purchases, the time is coming to examine the impacts of the policies”. Mr Kiuchi continued, “If we conclude that the chance of achieving our target isn’t so high by extending the current policies, I think we of course need to consider new forms of monetary easing in a flexible manner.”
Japan is faced with an enormous debt burden, slowing economic growth (both globally and domestically), and the demographic pressures of an ageing population. And whether it chooses austerity or further monetary stimulus, the outlook for the Japanese yen looks distinctly negative.
It is my opinion that Japan will choose to inflate away a good portion of its debt. I therefore expect the BoJ to pursue ever more aggressive stimulus measures which will debase the value of the Japanese yen sending it into a long downtrend.