From Goldman Sachs's Japan outlook for the coming year.
GS expect core CPI inflation (excludes fresh food) will decelerate after peaking at around 3.5% at end-2022, but will remain above 2% through most of 2023 "owing largely to the cumulative impact of the weak yen coming to the fore".
GS on "the BOJ has positioned wage growth of at least 3% as a prerequisite for stable achievement of its 2% inflation target":
- We expect an acceleration in basic wage growth reflecting high inflation effectively canceled out by a deceleration in bonuses and other wages chiefly due to a slowdown in corporate earnings growth, resulting in largely flat overall wage growth just shy of of 2%.
- stable wage growth of 3% still seems to be a distant prospect
Thus follows Goldman Sachs' outlook for Bank of Japan policy:
- We do not expect an explicit rate hike ... in 2023, chiefly due to the above-noted wage factor and the Kishida administration’s concerns about global slowdown.
- That said, adjustments to forward guidance with an easing bias and widening the 10-year yield band in 2023 are possibilities, in our view.
Goldman Sachs yen forecasts:
