BoJ Prefers Inflation Forecast Cut Over Easing

The Bank of Japan is likely to slightly cut next fiscal year’s inflation forecast in a quarterly review, sources familiar with its thinking say, but the central bank isn’t expected to ease in the near term after having revamped its policy framework only last month.

Many central bank policymakers see little need to expand stimulus any time soon, including at the next two-day rate review concluding on Nov. 1, unless an abrupt yen spike threatens to derail a fragile recovery, the sources said.

Analysts say the BOJ would be in no rush to ease because its new policy framework, which targets interest rates rather than base money, is one better suited for a long-term battle to reach its ambitious 2 percent price goal.

Reuters

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.