Inflation hitting 3% is unlikely to budge Bank of Japan (BOJ) Governor Haruhiko Kuroda to move towards monetary policy normalization, the latest Bloomberg survey of economists showed.
“16 of 19 analysts said that a further acceleration to 3%, the highest since 1991 excluding tax-hike years, wouldn’t increase the likelihood of policy change before Kuroda’s term ends in April.”
“That’s because economists say inflation needs to remain at 3% or more for at least half a year before a policy shift can happen.”
“Economists have flagged that inflation isn’t the sole metric that would trigger a policy shift. “
“The need to also look at the state of paychecks, the impact from any slowdown in the global economy and moves in the yen.”
“While economists say that half a year of core inflation at 3% may trigger a policy shift, that’s not their base case. Japan forecasters expect inflation to hit 2.5% in the final three months of 2022 and then peak out toward 1% at the end of next year.”