Japan’s monetary base fell 13.6% year on year in October, a smaller decline than the -14% forecast. The reading indicates the stock of currency in circulation plus financial institutions’ reserves at the central bank continued to contract, but at a slightly slower pace than expected.
Monetary Base Downtrend Continues
Even so, the monetary base remains in negative territory, extending the downtrend seen in recent months.
Implications for Balance Sheet and Economy
The marginal beat versus forecasts may temper expectations of further balance sheet contraction, although the data still points to a shrinking pool of base money in the economy.
