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MNI POLICY: BOJ Encouraged By Tankan Inflation Expectations

(MNI) Tokyo

Bank of Japan officials have been heartened by the resilience of companies’ medium-to-long-term inflation views in September’s Tankan survey, as the BOJ continues to gather evidence of what it hopes could be a solid and sustainable rise in domestic inflation ahead of key wages data early next year, MNI understands.

While the September Tankan survey showed a decline in one-year expectations as the impulse fades from the higher import prices which have fueled the recent rise in inflation, the three-to-five year expectations held firm. This would be compatible with a sustainable increase in domestic inflation, though officials say they will need to consider wages data early next year including the crucial spring pay settlement survey before the BOJ can decide whether to move away from its current ultra-easy policy settings.


The Tankan showed companies on average saw one-year-ahead consumer inflation at 2.5% in September, slowing from 2.6% in June. But, in a break from the so-called “adaptive expectations” pattern of recent years, their views on inflation three and five years ahead were unchanged, at 2.2% and 2.1% respectively.

If these three- and five-year expectations remain stable in coming months, it will add to evidence that companies’ inflation views have become anchored at a satisfactory level. But the BOJ’s inflation assessment will also be informed by other data, with expectations by households and investors still below the 2% medium-term inflation target. (See MNI INTERVIEW: BOJ Yield Curve Move Possible In January-Kameda)

It is also closely monitoring the impact on expectations of the international economic environment and the U.S. economy.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

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