According to Reuters, citing unnamed sources
- BOJ may view that inflation could fall short of its 2% target for as long as 3 more years
- The view may emerge from the BOJ's meeting on 30 to 31 July later this month
- BOJ may also point to structural factors that may weigh on inflation for years
- BOJ will consider cutting not its price forecasts up until fiscal year ending March 2021
If true, it would be the strongest indicator yet that the central bank is willing to accept that they won't meet their target as quickly as they suggested earlier this year. And are we really that surprised? I think not.
The BOJ will be meeting at the end of this month on 30 and 31 July, with the monetary policy decision and statement to be released on the second day. Currently, they project inflation to be 1.3% in the current fiscal year with a 1.8% forecast for both fiscal year 2019 and 2020. Expect all of that to be revised downwards.
The yen is holding up rather well in spite of the softer stance here, but as I said, this will only catch out market participants who haven't been paying attention.
