Bank of Japan has raised its forecast for planned inflation
2022.12.31 01:20
Bank of Japan has raised its forecast for planned inflation
Budrigannews.com – According to a report from Saturday, the Bank of Japan (BOJ) is considering raising its inflation forecasts in January to show price growth close to its target of 2% in fiscal 2023 and 2024.
This month, the BOJ shocked markets by widening its 10-year yield cap range. Although the move was meant to correct market distortions in the bond market, some analysts interpreted it as a sign that it was about to end its ultra-loose monetary easing.
The BOJ Governor Haruhiko Kuroda has stated that the central bank could discuss the exit if the achievement of its 2% inflation target in conjunction with wage increases is within reach. Upgrades to the BOJ’s inflation forecast would further fuel such speculation.
Nikkei stated that the proposed changes would result in the core consumer price index rising by approximately 3% in fiscal 2022, between 1.6% and 2% in fiscal 2023, and nearly 2% in fiscal 2024, citing sources with knowledge of discussions at the central bank.
The previous forecasts, which were made public in October, were respectively around 2.9%, 1.6%, and 1.6%.
Last week, government data revealed that Japan’s core consumer prices, which do not include fresh food items, increased by 3.7% in November, the highest rate since 1981.
However, Kuroda has ruled out the possibility of a quick increase in interest rates, claiming that the recent price increases were caused by one-time increases in the costs of raw materials rather than strong demand.
After its next policy meeting on January 17-18, the BOJ will release the most recent quarterly growth and price outlook.
Analysts are also waiting to see if annual wage negotiations in the beginning of next year will result in substantial pay raises, or if Kuroda’s 10-year tenure in April results in any revision to a 2013 policy agreement between the BOJ and the government. Both of these factors could point to a shift in monetary policy.
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