BoJ: gauging a slower Japanese economy? - Nomura

Analysts at Nomura explained that the economic momentum likely slowed in much of the global economy over the previous quarter.

Key Quotes:

"While the euro area economic slowdown is attracting strong interest in the G10 FX space, the Japanese economy may have shrunk for the first time in two years. The contraction, if any, is likely temporary, but may be used as a reason to keep economic policy accommodative ahead of the sales tax hike decision."

"The weaker response of inflation to the improving economy, not the economic growth itself, we believe, has been the major concern for the BOJ. However, in the short term, weaker growth could be a reason why the BOJ may delay any tightening, and monetary policy divergence will likely keep widening."