Friday, November 20, 2015

BOJ slightly downgrades inflation expectations view - Nomura

FXStreet (Delhi) - Yujiro Goto, Research Analyst at Nomura, notes that the BOJ left its policy unchanged as widely expected while in the statement, the BOJ became slightly more dovish on its assessment on inflation expectations.

Key Quotes

“Although the Bank kept its broad assessment on inflation expectations unchanged as "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective," the Bank added "although some indicators have recently shown relatively weak developments," in the statement.”

“Governor Kuroda admitted some of various inflation expectations data (surveys and BEI) are weak, but he did not specify which data are actually weak, leading the slight downgrade.”

“At the same time, Governor Kuroda repeated that the price-setting behaviour of corporates continues to change, concluding there is no need to change the view that price expectations are rising.”

“Even though the Japanese economy recorded a second consecutive quarter of negative growth, Governor Kuroda’s view on the economic recovery was largely unchanged.”

“Governor Kuroda has been emphasizing the significance of the underlying inflation trend, which is determined by 1) the output gap, 2) inflation expectations, 3) wages, and 4) price setting behaviour.”

“Market expectations for a BOJ easing by year-end have already almost disappeared. Thus, the impact of a likely decision of no policy change in December on USD/JPY would be limited.”
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