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Outlook Remains Bearish

--BOJ Tankan: Biz Long-Term CPI Outlook Dips
--BOJ Tankan: Biz 1-Yr ahead CPI Outlook at 0.9%, Dec 0.9%
--BOJ Tankan: Firms' 3-Yr ahead CPI Outlook at 1.1% vs. Dec 1.1%
--BOJ Tankan: Firms' 5-yr ahead CPI Outlook at 1.1% vs. Dec 1.2%
     TOKYO (MNI) - The short- and medium-term inflation outlook among Japanese
companies were unchanged in March from December, but the long-term inflation
outlook fell, the Bank of Japan's quarter Tankan survey for March showed.
     The BOJ board will likely maintain the view "inflation expectations have
been more or less unchanged" at the April 24-25 policy meeting.
     The survey continued to show that the pace of a pickup in consumer prices
remained slow.
     The inflation outlook follows Monday's main Tankan release, that showed
that business sentiment fell broadly from three months ago, in line with
expectations, hit by China's slowing economy and a worsening of the terms of
trade.
     But the survey also showed capital investment plans by major and smaller
firms in this fiscal year were above historical averages, easing BOJ concern
that the virtuous cycle from profits to spending may stall.
     The survey, published Monday, was conducted from February 25 to March 29.
     The key points from the inflation outlook section of the Tankan follow.
     --In the March survey, companies on average saw the inflation rate for one
and three years ahead unchanged from three months ago, while slightly lowering
their inflation outlook for five years ahead.
     --Firms on average expect the annual consumer inflation rate at 0.9% a year
from now, unchanged from 0.9% in December. Companies also expect a 1.1% rise
three years out, also unchanged from December. But they expect five years ahead
numbers to fall to 1.1% in March from 1.2% in December.
     --Many companies -- 32% of those polled, (vs 32% in December) -- expect the
inflation rate to be about 1% in 12 months. The survey showed that 13% of all
firms (13% previously) projected 2% inflation a year ahead while 32% (34% three
months earlier) saw a flat inflation rate during the same period.
     --Smaller firms continued to project higher inflation than larger
corporations, as they tend to be hit harder by rising costs and a tighter labor
supply.
     --The survey showed companies on average expect sales prices to rise 0.8% a
year from now, unchanged from December. They saw an increase of 1.2% three years
ahead and 1.5% five years ahead, both unchanged from December.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com