The Bank of Japan quarterly survey of household inflation expectations was conducted in December:
-
79.3% of Japanese households expect prices to rise a year from now,
compared with 86.8% in previous survey - Japanese households
expect inflation to rise by average +10.0% a year from now, median
+8.0% - 76.5% of Japanese
households expect prices to rise five years from now, vs 80.7% in
previous survey - Japanese households
expect inflation to rise by average +7.6% five years from now, median
+5.0%
While the results are down just a little from the previous survey in September, that final point shows households are certainly adjusting their expectations for higher for longer. There is an argument amongst economists that consumers are not equipped with the skills of professional economists, and are not, therefore, very good in predicting inflation. Which sort of misses the point, policy makers care what consumers think and feel on inflation and are likely to react with policy in response.
While there are plenty of arguments against the Bank of Japan tightening policy, household expectations would seem to say this is the right thing to do.
USD/JPY is unchanged:
This article was written by Eamonn Sheridan at www.forexlive.com. Source