19 Jan 2015
BoJ could revise lower the CPI – BTMU
FXStreet (Edinburgh) - Derek Halpenny, European Head of GMR at BTMU, expects the inflation figures in the Japanese economy to be revised lower by the BoJ in its next meeting.
Key Quotes
“The January monetary policy meeting is one in which we get an update on the semiannual GDP and inflation forecasts from the BOJ”.
“At the meeting on 31st October, the BOJ had a core CPI forecast of 1.7% for FY2015 and 2.1% for FY2016”.
“Given that oil prices have dropped by 40% since that date, it is highly likely that CPI will now be around 0.5ppt lower than what the BOJ had thought”.
“Indeed, assuming the crude oil price remains as it is and given the sales tax increase will drop out of annual CPI readings from April, the chances are reasonably high that core CPI could fall close toward zero percent over the summer months”.
“That will put increasing pressure on the BOJ to do more. This week’s meeting may see (as we stated last week) two lending programs being extended beyond the current deadline of March”.
“At this stage and given what’s happening in terms of the outlook for CPI, an extension of these programs would not be a surprise”.
Key Quotes
“The January monetary policy meeting is one in which we get an update on the semiannual GDP and inflation forecasts from the BOJ”.
“At the meeting on 31st October, the BOJ had a core CPI forecast of 1.7% for FY2015 and 2.1% for FY2016”.
“Given that oil prices have dropped by 40% since that date, it is highly likely that CPI will now be around 0.5ppt lower than what the BOJ had thought”.
“Indeed, assuming the crude oil price remains as it is and given the sales tax increase will drop out of annual CPI readings from April, the chances are reasonably high that core CPI could fall close toward zero percent over the summer months”.
“That will put increasing pressure on the BOJ to do more. This week’s meeting may see (as we stated last week) two lending programs being extended beyond the current deadline of March”.
“At this stage and given what’s happening in terms of the outlook for CPI, an extension of these programs would not be a surprise”.