Japan unveils fresh fiscal stimulus

0.1% GDP stimulus "larger-than-expected," says BBVA.

"Japan's government approved a larger-than-expected, although still modest, fiscal stimulus package of subsidies and grants worth 0.1% of GDP to help offset an expected economic contraction in the second half of this year. The package will be financed with funds in the budget reserve to avoid new debt issuance given Japan’s extremely high public debt level," said BBVA.

BBVA further noted how Japan's inflation fell for a fifth straight month, by -0.3% y/y (consensus: -0.4% y/y) in September, which force the hand of Japan's central bank to act this month.

"Persistent deflation is adding to pressure on the BoJ to ease policy further at its next policy meeting on October 30, given its 1% inflation target," said BBVA.