BOJ September. meeting summary: Core inflation likely to increase more slowly in 2023

Bank of Japan September meeting summary has some interesting remarks on inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term.

• Japan's core consumer inflation likely to accelerate toward year-end, narrow pace of increase thereafter
• Expect wide range of goods to see price rises ahead
• Challenges remain to achieve BOJ's 2% inflation target as yet to confirm Japan will see sustained wage rises
• We must be humble, carefully scrutinise without any preset idea risk Japan's inflation may sharply overshoot expectations including via FX moves
• We must scrutinise wage moves, mechanism behind Japan's price moves as existing indicators swayed largely by import price moves
• There is chance Japan will see high wage growth given tight labour market
• Pandemic-relief programme ought to be phased out as Japan only half-way in seeing end to pandemic

• BOJ must maintain easy policy as output gap remains negative, even though there is significant risk inflation may overshoot expectations

• BOJ must maintain current monetary easing until inflation stably exceeds 2%, driven by rise in trend such as services prices

• No immediate need to change monetary policy guidance now as we are in a phase where close scrutiny needed on whether Japan will see positive cycle of wage, prices

• Some point to interest rate divergence as factors driving yen declines

• When the right time comes, it'll be important to have an appropriate communication with the market on exit strategy from easy policy

• the weak yen pushes up import, food prices in the short-term, but boosts economic activity in the medium and longer term

• Important to expand inbound consumption, strengthen smaller firms' export strength to reap benefits of weak yen

  
  

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There are chinks showing in the BOJ commitment to its ultra-easy policy if these headlines from the Summary are anything to go by!

The Bank sees higher inflation ahead. The Bank is assessing wage rises. And mentions changing communication with the market on policy when the time comes 9they have said this many times before though).

If you are of the opinion that the BOJ will move to curtail its current ultra policy the remarks here will support your view. Its not immininet, but there are chinks showing. On the other hand, if you are of the view that this is the Bank saying such things in order to curtail the drop in the yen I think you also may very well have a point.