This week the Bank of Japan decided to continue with its QE program. “Governor Haruhiko Kuroda and his colleagues continue to put on a brave face and act as if everything is going according to plan; but it’s not”, says Max McKegg, MD of Technical Research. The BOJ’s outlook showed that GDP is now expected to expand in fiscal 2015 at a “somewhat lower” pace, while inflation “is likely to be about 0% for the time being”. The board said: “QE has been exerting its intended effects” and it will continue for “as long as it is necessary” to achieve the 2% price target and “make adjustments” to policy as appropriate. However, “the logical outcome of expanding the monetary base by JPY 80 trillion ad infinitum would leave the BOJ with a colossal balance sheet close to the size of the whole Japanese economy”, McKegg says. “In such circumstances the idea of expanding QE “as appropriate” seems even more ludicrous, hence the FX market’s reluctance to price it in and take the yen any lower.” To read more visit: (VIEW LINK)