MNI BRIEF: Inflation View 2% If Target Achieved - BOJ's Ueda

Bank of Japan Governor Kazuo Ueda said on Tuesday that the expected inflation rate will rise to 2% if the 2% price target is achieved on a long-term basis.

Ueda told lawmakers that the expected inflation rate has risen, compared with the deflationary-era and the custom or norm, where wages and prices do not rise, is changing gradually.

The BOJ’s baseline scenario holds the y/y rise of Japan’s core consumer price index will fall below 2% toward the middle of this fiscal year and the core CPI will move toward 2% again due to improvement of the output gap and expected inflation rate as well as wage hikes.

MNI reported Monday Bank of Japan staff are set to increase their inflation forecast for the BOJ’s July meeting and could recommend increasing the 0% rate currently targeted under yield curve control, though it is uncertain Governor Kazuo Ueda would follow such advice (see: MNI POLICY: BOJ Officials Mull Recommending July YCC Tweak).