Bank of Japan Not Expected to Offer Monetary Stimulus
Don't expect the Bank of Japan to unveil more monetary stimulus following its policy meeting on Wednesday.
"We're not betting that the Bank of Japan at the moment is going to do anything, despite the fact that we're back in technical recession in Japan," said Michael Ingram, a market analyst at BGC Partners, based in London. "I think over the short haul, all we're looking for is maybe some sort of fiscal stimulus from the government."
Japan's economy contracted 0.8% during the third quarter and 0.2% during the second quarter, fitting the technical definition of a recession, or two back-to-back quarters of a shrinking economy.
Though he says more monetary stimulus should be a "sooner rather than later" conversation.
Speaking of central banks, Ingram says the Federal Reserve will have a green light to lift interest rates for the first time in nearly a decade when it meets in December. He said the rhetoric coming out of the Fed has been rather hawkish, notably from Vice Chairman Stanley Fischer and Federal Reserve Bank of New York President William Dudley.
"I think we've cleared the landing strip for a rate hike," Ingram added. "But having said that, I think it will be one and done for quite some time because the global outlook remains very messy and the Fed has indicated that the path upward [for rate hikes following the initial one] will be very gradual."
Meanwhile, stocks in Europe were in rally mode on Tuesday, despite Friday's horrific terror attacks in Paris. Ingram said the gains were a reaction to the significant selloff seen across the board last week, which came amid a disappointing earnings season and concerning comments from the European Central Bank about the health of the eurozone economy.