- The Japanese economy shows some weakness, but recovers moderately
- Chances for solid wage growth increase this year
- Inflation expected to exceed 2% this fiscal year, then slow thereafter
- It is necessary to monitor exchange rates, market developments and their impact on the economy and prices.
- Core inflation expected to gradually accelerate towards the end of the current forecast period, quarterly report says
- The BoJ will orient its policy appropriately by keeping an eye on the economy and price developments, with short-term rates as its policy target.
- BoJ expects accommodative monetary conditions to continue for now
- Expects consumption to increase gradually as wage gains lift household incomes
- Temporary factors weighing on consumption should dissipate
- It is important to maintain accommodative monetary conditions while core inflation has not yet reached 2%.
- If economic and price developments continue as we currently expect, we must consider reducing the degree of monetary support.
- Whether this will happen will depend on upcoming data
- I have no predefined ideas at this time on how and when we will adjust interest rate levels.
- Even after the March policy change, interest rates are expected to remain low and real interest rates to remain in deeply negative territory.
- We hope to reduce our bond purchases in the future, but we cannot say now when and by how much.
- Won’t immediately start offloading BOJ ETF holdings
This article was written by Arno V Venter on www.forexlive.com.
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