MNI BRIEF: BOJ Eyes Lower Phone Costs, Economy, On Price Views

Bank of Japan officials are watching inflation expectations on the small chance that a recent change in base year and lower mobile phone charges could be a "sectoral shock" and shape the price outlook, MNI understands.

A rise or drop in the CPI not linked to the output gap and crude oil prices normally do not affect inflation expectations.

However, the BOJ has said that inflation expectations are likely to be influenced by actual price moves in terms of the adaptive component. Bank officials are carefully examining whether the BOJ can maintain the view from 2017 that declines in mobile phone charges in the CPI brought about "a sectoral shock" that is not directly related to the output gap and inflation expectations.

Japan's July annual core consumer inflation rate fell 0.2% y/y, for the 12th straight drop.

Bank officials will monitor near-term inflation expectations for factors like further drops in phone charges, and if other prices weaken along with sluggish economy, see: MNI INSIGHT: BOJ Turns Focus To Q4 For Economic Rebound Signs.