Global economic data mixed, BoJ maintains monetary policy as inflation seen rising

The euro area's recovery appears to have lost momentum.

Reports on Tuesday showed that the European Commission's consumer confidence index for the region fell to minus 15.4 in November from minus 14.5 in October and Markit's composite PMI for the region fell to 51.5 this month from 51.9 the previous month.

The fall in the composite index was driven by a decline in the services index, which fell to 50.9 from 51.6. The manufacturing PMI rose to 51.5 from 51.3.

Also seeing an improvement in manufacturing in November is the US, where Markit's manufacturing PMI rose to 54.3 from 51.8 in October.

However, HSBC's manufacturing PMI for China fell to 50.4 in November from 50.9 in October.

Meanwhile, the Bank of Japan did not announce any fresh measures to stimulate the economy after its monetary policy meeting on Thursday. It said in a statement that the economy was “recovering moderately” and that inflation “is likely to rise gradually”.

However, if inflation does rise in Japan, it may not necessarily be the BoJ's doing. From a post by Matt Busigin:

Policymaking, fiscal or monetary, really just shapes what trends deliver at the margin. It is less important and less statistically affecting than either supply or demand...

... The dependency ratio in the United States is possibly the best in the Western world, but it is still projected to nearly double in the next four decades. At the same time, dependency ratios in the rest of the world are projected to spike faster and further. This is the biggest story for the supply curve and, consequently, for inflation. The global depletion of peak-aged labor clearly necessitates one of two things: higher prices or higher rates of investment to form new capital...

After being overinvested and hence oversupplied (evaluated with respect to the declining pace of inflation) for a decade, the Great Recession has seen a sharp decline in investment and an even larger decline in per capita investment. The great force that drove down inflation has not only paused but also reversed. In fact, the level of investment at the time of writing is still below replacement.

See again this CNBC report on the evolution of the elderly dependency ratio in Asia, including Japan.