MNI BRIEF: BOJ's Trend Inflation Estimate Rises Across Models

The Bank of Japan analysed that trend inflation estimates have gradually increased in all models, according to the full text of the BOJ April Outlook Report released Tuesday.

“The results need to be interpreted with some caution since they largely depend on the assumptions made in the models and as the results may be revised when new data become available,” the BOJ said.

The report also noted a variety of perspectives is necessary, including anecdotal information from firms.

The report said high base pay increases are expected to be agreed in the 2024 spring labor-management wage negotiations, which will encourage increased spillover from wages to prices. But careful attention is warranted in particular on whether labor cost increases will continue to filter through to selling prices as the effects of the past rise in raw material costs wanes further, the report noted.

The BOJ board left its policy rates unchanged following last week's meeting. (See MNI BOJ WATCH: Ueda Flags Policy Change On Weak Yen-Led Inflation)