According to the Nikkei, the BOJ may raise inflation forecasts to get closer to the 2% target.
Nikkei said on Saturday that the Bank of Japan (BOJ) is thinking about raising its inflation forecasts in January so that price growth is close to the 2% goal in fiscal 2023 and 2024.
This month, the Bank of Japan (BOJ) shook up the markets by increasing the range of its 10-year yield cap. This was meant to fix problems with the bond market, but some analysts saw it as a sign that the BOJ was getting ready to stop its very loose monetary policy.
Upgrades to the BOJ’s inflation forecast would fuel these rumors, as Governor Haruhiko Kuroda has stated that the central bank may consider exiting the market if it meets its 2% inflation target and wage increases are close to occurring concurrently.
Nikkei said that people who knew what was being talked about at the central bank said that the proposed changes would cause the core consumer price index to go up by about 3% in fiscal 2022, between 1.6% and 2% in fiscal 2023, and almost 2% in fiscal 2024.
The previous predictions, which came out in October, were around 2.9%, 1.6%, and 1.6%.
Last week, government data showed that Japan’s core consumer prices, which don’t include fresh food, went up by 3.7% in November. This was the largest increase since 1981.
But Kuroda has ruled out an interest rate hike in the near future. He says that recent price increases were caused by one-time increases in the cost of raw materials, not by strong demand.
After its next policy meeting on January 17-18, the BOJ will share its latest forecasts for growth and prices for the next three months.
Analysts are looking for signs of a change in monetary policy. They are also waiting to see if annual wage talks at the beginning of next year will lead to big pay raises or if Kuroda’s departure from the BOJ in April will change a policy agreement made between the BOJ and the government in 2013.