Due to falling oil prices the BOJ now sees a bigger chance of CPI falling under 1%, say people familiar with central bank thinking.
One sees the prospect as “now possible” and another says it’s 50/50. They also say that a move below 1% could last but one said that sustained falls after October were unlikely.
This could ultimately be what’s driven the yen this morning as the market may feel that we’re in a for another dose of stimulus from the BOJ.
In one aspect inflation falling on lower oil prices isn’t bad news for Japan as they are heavy oil importers, so the fall in price should be good for the economy. However, the market has the BOJ’s 2% target constantly at the back of its mind so any events that derail or push that back will be met with expectancy of further BOJ pumping.
Full story from WSJ here
