12 Jan 2015
BOJ may downgrade inflation forecasts - Nomura
FXStreet (Bali) - The likelihood of the BOJ downgrading inflation forecasts is now rising at its next meeting of 20-21 January, notes Yujiro Goto, FX Strategist at Nomura.
Key Quotes
"Currently, the BOJ forecasts core CPI inflation of +1.2% in FY2014 and +1.7% in FY2015, which are both higher than the market consensus. We think a downgrade in FY2014 inflation forecast cannot be avoided, but greater attention should be paid to the possibility of a downgrade of the FY2015 forecast."
"We think a further downgrade of the FY2015 inflation forecast from +1.7% will increase market expectations for a BOJ easing, as a downgrade suggests that it will be more difficult for the Bank to achieve its 2% inflation target. Higher expectations for a BOJ easing could support USD/JPY into the BOJ meetings in April."
Key Quotes
"Currently, the BOJ forecasts core CPI inflation of +1.2% in FY2014 and +1.7% in FY2015, which are both higher than the market consensus. We think a downgrade in FY2014 inflation forecast cannot be avoided, but greater attention should be paid to the possibility of a downgrade of the FY2015 forecast."
"We think a further downgrade of the FY2015 inflation forecast from +1.7% will increase market expectations for a BOJ easing, as a downgrade suggests that it will be more difficult for the Bank to achieve its 2% inflation target. Higher expectations for a BOJ easing could support USD/JPY into the BOJ meetings in April."