BOJ is likely to consider raising their consumer inflation projection to around 2.5%

In summary:

  • Bank of Japan officials meeting this week will probably consider a sharp increase to their inflation forecast for this fiscal year, while also discussing concerns about whether the upward trajectory is sustainable
  • BOJ policy board is likely to mull raising the consumer inflation projection to around 2.5% for the year ending in March, up from 1.8% in the April estimate
  • expect projections for the following fiscal years to be largely unchanged to reflect a lack of confidence the bank can achieve its 2% inflation goal in a stable manner

That info comes via Bloomberg, citing “according to people familiar with the matter”.

Updating the CPI forecast is one thing, but its pretty much offset by the addition that the Bank will likely not think such a high rate (by Japanese standards) is sustainable. The first point argues for an increased likely hood of some sort of YCC tweak, the second, fo course, does not.

The consensus is for unchanged policy, but its not unanimous:

Goldman Sachs expect a tweak:

As do MUFG:

But …


The Bank of Japan policy meeting this week, July 27 and 28, will also include the publication of the Bank’s latest quarterly Outlook Report, which will have updated forecasts, such as for CPI.

This article was written by Eamonn Sheridan at Source