Even as growth and deflation fears roil global markets and weak data casts a shadow over Japan’s economy, the Bank of Japan appears set to resist pressure for more stimulus measures or to accept that its inflation target is unrealistically high.
People familiar with its deliberations said the BOJ, which has failed for two decades to drag Japan’s economy from the grip of no or zero inflation, is preparing to roughly halve its 1 percent economic growth forecast for this fiscal year, but stand pat on policy and its prediction that inflation will hit its 2 percent target in the year from next April.
Private economists think inflation has peaked at barely half the bank’s forecast rate, however, and financial markets had been expecting the central bank to add to its massive monetary easing, with speculation growing it could act at its policy meeting on Oct. 31.
“We think the BOJ’s view on consumer prices is overly optimistic,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. BNP’s current expectations for inflation are around 1.8 percent at the end of 2015, but Shiraishi said global conditions could render that time frame optimistic, too.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.