The Bank of Japan has chosen to keep its ultra-loose monetary policy intact, whilst reducing its core inflation forecast for the upcoming fiscal year. The BOJ voted unanimously to maintain interest rates at -0.1% and has held onto its yield curve control policy, maintaining the upper limit for 10-year Japanese government bond yield at 1%. The central bank’s decision comes as no surprise, with the Japanese economy continuing to struggle. Economists and other experts expected the ruling, with the BOJ being the only central bank in the world to maintain negative rates. Despite speculation, the Bank of Japan has given no clear indication as to what has motivated this move.
In Japan’s efforts to stabilize its stock markets, authorities are reportedly considering a package of measures totaling 2 trillion yuan, which is approximately $278.53 billion USD. The Chinese cabinet has been leading conversations on how to stabilize their stock markets and enhance market confidence. Hang Seng, Asia’s worst performing market last year, is beginning to rebound. Shares have jumped more than 3% being led by technology companies, following two days of consecutive decline. Chinese shares initially fell below the flatline but have since increased in Hong Kong’s Hang Seng. The stock market has been showing a trend towards larger deals, despite ongoing volatility in bond markets and there is hope that a stronger equity rally will uplift market volumes.
Goldman Sachs has revised its GDP predictions, now foreseeing fourth-quarter GDP growth at 2.1%, an increase of 0.3 percentage points compared to their previous forecast. The company is also looking to 2023, revising its GDP forecast to 2.8% compared to earlier estimates. The third-quarter has seen momentum in the markets being cautiously followed by expectations of a potential economic downturn and a U.S. recession in the coming year. Especially, initial public offerings and mergers and acquisitions. As companies push through deals before an expected economic decline, analysts expect M&A activity as a window of opportunity that will open in the first half of 2024.