Headlines via Reuters, citing unnamed sources:
- BOJ increasingly focused on core-core CPI in gauging price trend
- BOJ likely to raise fiscal 2022, 2023 forecasts for core-core CPI in new quarterly projections
- upward revision in BOJ's price forecasts unlikely to trigger an immediate interest rate rise
- BOJ may also slightly revise up core-core cpi forecast for fiscal 2024, depending on wage prospects
The upgrades to the inflation outlook would push the outlook for core-core inflation closer to the BOJ's 2% target. This'll keep market expectations that the Bank of Japan bank will phase out its ultra-loose policy when Governor Haruhiko Kuroda's second five-year term ends in April on the boil.
The upward revision alone was unlikely to trigger an immediate interest rate rise, because many BOJ officials saw a need to scrutinise the outcome of annual spring wage negotiations and the fallout from U.S. interest rate hikes, the sources said.
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Core-core inflation is the CPI excluding Food, Energy. This is the closest of the Japanese CPI measures to the US core CPI.
The most recent CPI data from Japan is for November:
National CPI 3.8% y/y, expected 3.7%, prior was 3.7%
National CPI excluding Fresh Food 3.7% y/y, expected 3.7%, prior was 3.6%
- highest in 40 years for core inflation, since December of 1981
National CPI excluding Food, Energy 2.8% y/y, expected 2.7%, prior was 2.5%
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USD/JPY little changed on the headlines:
