Bank of Japan to Face Inflation Showdown

The Bank of Japan is set on Friday to project that it will meet its 2 percent inflation target in two years, a forecast analysts say may be too optimistic and could put the bank’s credibility on the line.

The central bank, charged with overturning years of dogged deflation, is not expected to come up with any fresh policy initiatives after new Governor Haruhiko Kuroda stunned markets on April 4 by promising to inject about $1.4 trillion into the economy to hit the inflation target in roughly two years.

Instead, the focus will be on the BOJ’s economic forecasts to be released in its twice-yearly outlook report and how they compare with private-sector economists, many of whom argue that 2 percent inflation in two years is unrealistic.

“These new BOJ figures will be more a vow of determination rather than credible forecasts,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza