The Bank of Japan is considering raising its inflation outlook for the current business year to next March, from 2.5% at present to near 3%.
That's the report in Japanese media, Kyodo, the item cited "sources close to the matter":
- upward revision would reflect price hikes that have been broadening further than expected and rising crude oil prices, the sources said
- also due to the yen's depreciation boosting import prices
The background to this is that:
- the index for retail prices remained at a high level for both major manufacturers and nonmanufacturers in the latest BOJ Tankan business survey, released earlier this month
- the BOJ announced in July it'd allow 10-year government bond yields to rise toward 1.0%
- Bank of Japan Governor Ueda continues to insist on the need to retain monetary easing, ruling out a near-term rate hike
- current BOJ estimates are that core consumer prices, excluding volatile fresh food items, will undershoot the 2% target in fiscal 2024 and 2025
- The BOJ maintains that the 2% inflation goal will not be achieved in a sustainable and stable fashion without sustainable wage growth, this despite core CPI sitting above 2% for over a year. The Bank views the weakening yen's impact on rising import costs largely responsible.
USD/JPY update, sticky around 148/149:
