The BOJ announcement came during lunch time Thursday, but when the market reopened the Nikkei headed south surrendering earlier gains of 1.6% that turned to losses of 3.2%. For many the announcement caught investors by surprise since there was a feeling the BOJ would take some action to further weaken the yen. The yen has been rising much of the year against the dollar, hurting Japanese exporters.
Others speculated that the market's negative reaction to the bank's previous easing could have affected their decision to hold off until they have more data. The strength of the yen against the dollar also caught many off guard, but the Fed's decision to hold off on what was earlier projected to be four interest rates hikes this year to possibly only two no doubt gave the yen a boost.
According to the report, consumer prices in Japan were down lending further confusion since any sign of inflation appears to be harder to find than a four leaf clover. Apparently, deflation still rules the day after massive and unprecedented monetary easing policies by the BOJ, leaving officials there to ponder their next move.
What's next is anyone's guess, but a confidence crisis might be a good guess as it appears not just Japanese central bankers have no clue. In the U.S. many believe there is a concerted ploy to keep the market afloat until after the November election. Meanwhile, other markets faded as the news spread with the Shanghai Composite off 0.7%, the Hang Seng down briefly before rallying 0.3% and the Kospi shedding 0.6%
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