Lowering rate forecasts

- JGB yields less likely to rebound — "We have lowered our forecasts for the current 10-yr JGB yield from 1.00% to 0.95% for end-September, from 1.20% to 1.10% for end-December, and from 1.35% to 1.10% for end-March 2011. We now believe that upside and downside risks to our forecasts are basically in balance."
- "Financial deflation" worsening — "The impact of "financial deflation" looks set to be a key market theme over the next three to five years or possibly even longer, with balance sheet adjustments by governments and private-sector financial institutions—particularly in Europe—likely to remain a drag on global economic growth."
- Fiscal rebuilding strategies to be rethought — "While fiscal rebuilding throughout the world's developed economies is likely to continue, we expect to see at least some recalibration as concerns over worsening economic conditions highlight the need for safety net measures."
- Additional easing a matter of time — "The Bank of Japan opted not to hold an emergency monetary policy meeting last week, but will probably be forced to take some sort of action as the government prepares to submit a supplementary budget (required to fund additional stimulus measures) to the extraordinary Diet session in autumn."


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