Back
14 Nov 2014
Is Abenomics about to go 'ALL-IN' on the reflation game?
FXStreet (Bali) - Will the combination of a possible Japanese snap election and a delay in the sales tax trigger broad-based distrust in Abenomics? That's the word of mouth in global trading desks at the moment. And what would a delay and snap election mean for the Japanese Yen and prospects of further QE?
According to BoA's Joe Kraft, the potential decisions on election and tax delay "indicates that PM Abe is about to go “ALL-IN” on the reflation game by setting a clear timeframe to achieve clear and sustainable growth."
Kraft adds that "to meet this deadline, the Administration, the MOF and the BOJ would need to throw everything they’ve got to achieve it, which could potentially make the most recent round of easing pale in comparison."
Earlier today, another large Japanese newspaper - Mainichi Shimbun -, reported that Japan PM Abe is to announce a delay to the planned sales tax hike in a news conference next week, which adds to week-long speculation flooding the wires.
Mr. Kraft believes that, a looming re-election campaign must obtain an absolute 269 seat majority, "to ensure that the MOF/BOJ believe his promise that he can eventually reinstall the tax", Kraft said.
While official confirmation of a tax delay is to be perceived as Yen negative, likely to extend USD/JPY bull run, Kraft notes that a LDP majority above 269 would give Abe the 'green light' to go 'all in', adding "it could make Oct 31 BOJ easing look like a nursery rhyme."
According to BoA's Joe Kraft, the potential decisions on election and tax delay "indicates that PM Abe is about to go “ALL-IN” on the reflation game by setting a clear timeframe to achieve clear and sustainable growth."
Kraft adds that "to meet this deadline, the Administration, the MOF and the BOJ would need to throw everything they’ve got to achieve it, which could potentially make the most recent round of easing pale in comparison."
Earlier today, another large Japanese newspaper - Mainichi Shimbun -, reported that Japan PM Abe is to announce a delay to the planned sales tax hike in a news conference next week, which adds to week-long speculation flooding the wires.
Mr. Kraft believes that, a looming re-election campaign must obtain an absolute 269 seat majority, "to ensure that the MOF/BOJ believe his promise that he can eventually reinstall the tax", Kraft said.
While official confirmation of a tax delay is to be perceived as Yen negative, likely to extend USD/JPY bull run, Kraft notes that a LDP majority above 269 would give Abe the 'green light' to go 'all in', adding "it could make Oct 31 BOJ easing look like a nursery rhyme."