HONG KONG: The yen edged up against the dollar while Tokyo equities dipped in early trade as investors await the end of a crucial Bank of Japan meeting to see if it will ramp up its stimulus programme to inject life into the country's stuttering economy.
With the European Central Bank giving a strong indication it will loosen the reins on monetary policy in December and China last week slashing interest rates, economists are split on whether Tokyo will follow suit.
The meeting comes days after the Federal Reserve dropped a hint that it would raise US interest rates, confounding expectations it would delay a move until the new year owing to weakness in the global economy.
"The key question today is the BoJ and whether they will follow the European Central Bank lead in signalling or even delivering further policy stimulus," Sharon Zollner, a senior economist at ANZ Bank New Zealand Ltd. in Auckland, said in a client note.
"Further stimulus, or a promise thereof, would alter market dynamics, offsetting the Fed normalisation pulse."
After more than two years of huge government spending and BoJ bond-buying stimulus -- pushed by Prime Minister Shinzo Abe -- the Japanese economy is still unable to gain traction and inflation remains anaemic. The tepid readings have brought into question Abe's growth blitz.
On Friday official data showed consumer prices fell in September while household spending also retreated. The figures follow a string of downbeat indicators that have fanned calls for the BoJ to add to the stimulus.
There is speculation the bank will roll back its already lacklustre inflation and growth projections as Japan teeters on the edge of recession.
Kazuhiko Ogata, chief economist of Credit Agricole in Tokyo, told AFP there was a 50 percent chance the BoJ would announce an easing move after the meeting.
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