The Bank of Japan is likely to revise its outlook for consumer prices (core CPI, excluding fresh food), which will be discussed at this week’s monetary policy meeting. This was confirmed through interviews with several people familiar with the matter.
This reflects the fact that the current core CPI is in the 3% range, higher than the Bank of Japan’s assumptions, against the backdrop of companies actively passing on prices. However, there is no change in the situation where there is a great deal of uncertainty about the future, such as trends in overseas economies and next year’s wage hikes, and the outlook for fiscal 2024 and 2025 will be only a small revision from the current 2.0% and 1.6%.
For this reason, it is highly likely that the Bank of Japan will decide to maintain its large-scale monetary easing policy, as it will not be possible to achieve the sustainable and stable price target of 2%. According to multiple sources, the BOJ believes that there is little need at this point to deal with side effects such as market and financial intermediation functions by revising the YCC.
BOJ’s 2024 price outlook likely to be near 2%
On the other hand, the government will consider raising its overall economic outlook for the first time in a year, taking into account factors such as firm personal consumption and firm capital investment plans. Currently, it says that it is “recovering despite the impact of past high resource prices,” but there is a possibility that it will use more expressions such as “recovery.” The government’s monthly economic report indicates that the economy is “recovering moderately.”
After the decision-making meeting on the 28th, the Bank of Japan announced a new outlook for economic and price developments (outlook report).
Bank of Japan Head Office
Photographer: Kentaro Takahashi/Bloomberg
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(Updates with policy outlook, etc.)
2023-07-24 09:06:27
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