This morning the minutes of Bank of Japan’s policy meeting in July were published showing the board is divided on whether the current path of monetary policy has run its course. Some policy members warned that the current ongoing policy was having a detrimental effect on both volatility and liquidity in the government bond market. Two economists on the board, Takehiro Sato and Takahide Kiuchi, both disagreed with the decision taken on the 28-29 July meeting to double purchases of exchange-traded funds (ETF) with one of them quoted as saying, "An increase in ETF purchases would make it clear that monetary easing is approaching its limit. Moreover, this action can be regarded as an incremental approach to monetary easing, and could trigger endless expectations for further easing". However this was rejected by other members, with the minutes showing one board member having said "The Bank should reject the idea that monetary easing has its limit and side effects. A limit to its purchase of Japanese government bonds (JGBs), if any, would be the total amount outstanding of JGBs issued".
Also in Japan this morning the Emperor Akihito gave only his second ever televised address to the nation saying he fears his age and failing health would make it difficult to continue in his role. The monarch, who turns 83 in December, said that although he is in good health at the moment, he fears for his future well-being saying, “When I consider that my fitness level is gradually declining, I am worried that it may become difficult for me to carry out my duties as the symbol of the State with my whole being as I have done until now," Although he did not use the word ‘abdicate’, the address does strongly hint that the Emperor would like to begin handing over his duties.
In July both China’s imports and exports fell more than expected highlighting the continued weak global demand for goods with the UK decision to leave the EU also weighing heavily. Exports fell 4.4% with imports falling 12.5% resulting in a trade surplus in July of over USD52bn, the largest it has been since January 2016. However, despite the worse than expected trading figures, the overall economy still grew by 6.7% in the second quarter from a year ago, well within the 6.5 – 7% target that the Chinese government stated it would achieve at the beginning of the year.