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Decision & Tweaks To Forecasts Meet Wider Expectations

BOJ

At first glance there isn’t much to shock when it comes to the latest BoJ decision, with the usual 8-1 vote split (Kataoka being the usual dovish dissenter) as the Bank left its monetary policy settings unchanged. Its headline and core CPI forecasts were marked higher alongside a downgrade to the GDP projection covering the current FY (as expected). Note that the BoJ maintained its forward guidance surrounding interest rates, while tweaking its wording surrounding the overall economic assessment and inflationary picture in the wake of its forecast adjustments. The Bank did note that inflation expectations have risen, while it highlighted the risks that FX market gyrations and commodity price moves could have on inflation.

Fig. 1: Major Economic Forecasts From The BoJ’s Outlook for Economic Activity & Prices

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At first glance there isn’t much to shock when it comes to the latest BoJ decision, with the usual 8-1 vote split (Kataoka being the usual dovish dissenter) as the Bank left its monetary policy settings unchanged. Its headline and core CPI forecasts were marked higher alongside a downgrade to the GDP projection covering the current FY (as expected). Note that the BoJ maintained its forward guidance surrounding interest rates, while tweaking its wording surrounding the overall economic assessment and inflationary picture in the wake of its forecast adjustments. The Bank did note that inflation expectations have risen, while it highlighted the risks that FX market gyrations and commodity price moves could have on inflation.

Fig. 1: Major Economic Forecasts From The BoJ’s Outlook for Economic Activity & Prices

Keep reading...Show less