I don’t agree with the BoJ’s decision to cut from 0.3% –> 0.1%. The cost of borrowing is not the problem here. In fact, the impetus to cut was at least partially pressure from the MoF, in what amounts to a silly attempt to ease yen-strength. The reaction has been muted, and for now, the USD/JPY isn’t likely to even recover a 90-handle.
So we have a snafu and unfortunately what appears to be the backdrop for a revisit to all out QE. In addition, the government is said to be eying taking stakes in banks again. No doubt history repeats, but this fast? Japan’s (inaccurately) so-called “lost decade” is poised to become the lost quarter-century. Deflation lives on.
The only potential I see coming out of all this is with a strong yen and an ever-lower cost of capital, the ability to pursue outbound M&A. But why risk jumping the gun by buying now, when global economic conditions continue to deteriorate?