The Bank of Japan faces a difficult monetary policy decision at its two-day meeting beginning Monday, as the yen could further weaken if a policy tweak is not delivered as is expected by some in the financial markets.
The Bank of Japan maintained its policy settings on Friday, which really should not have been all that surprising, given the dovish messages that BoJ Governor Ueda and other BoJ members have been sending out for weeks. The BoJ does not appear to be in any rush to phase out its ultra-loose stimulus, given the weakness in Japan’s economy. Domestic consumption remains weak and the slowdown in the global economy is hurting the critical export sector.