Trade Deal Makes Further BOJ Stimulus Tougher, JPMorgan Says

  • Officials won't want to fuel concerns in U.S., economist says
  • Second-largest U.S. automaker urges Congress to reject deal

A historic Pacific-rim trade pact just agreed to by a dozen nations could make it tougher for the Bank of Japan to bolster stimulus, according to a JPMorgan Chase & Co. economist.

“Japan doesn’t want to risk fueling concerns among U.S. lawmakers by weakening the yen through monetary stimulus,” said Masamichi Adachi, an economist at JPMorgan and a former Bank of Japan official. “It’s unlikely Abe’s government will put pressure on the BOJ to ease more now.”

Ford Motor Co., the second-largest U.S. automaker, urged the U.S. Congress to reject the trade deal, saying the government should renegotiate it to “incorporate strong and enforceable currency rules.” That reflects concern that Japanese automakers would gain a competitive edge from efforts by the country’s policy makers to weaken the yen.

Finance ministers and central bankers from the Group of 20 nations pledged last month to “refrain from competitive devaluations.” That’s the first time since 2013 that the G-20 has used such language.

The BOJ is ending a two-day policy meeting Wednesday. Two of 36 economists predict the bank will announce additional stimulus while 15 forecast it for an Oct. 30 policy meeting when the bank will give an update of its outlook for inflation and economic growth.

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