BOJ reaffirms that underlying inflation is rising moderately towards 2% level

Composite indicators on medium-to-long-term inflation expectations show a gradual increase towards 2%Underlying inflation must be judged comprehensively by examining a wide range of informationIf recent rise in food prices were to persist, they could exert sustained upward impact on consumer pricesThe output gap has been on an improving trendLabour market remains extremely tight and wages are rising moderatelyFirms are continuing to pass on higher wagesThe mechanism in which wages and prices are rising moderately in tandem has been taking holdIncrease in oil prices can affect underlying inflation in both different directions, upward and downwardGiven changes in firms’ price-setting behaviour, prices may not be more susceptible to depreciation in yen currencyFull releaseThere’s nothing there that hasn’t already been said by the BOJ in recent weeks. That especially after they sort of pushed back against the government in releasing a new monthly core CPI estimate and also revaluing the estimated natural rate of interest in the past week. So, this is just a follow up on that.For some context, the BOJ had been under a bit of scrutiny lately as Japan’s headline inflation numbers show a drop back below the desired 2% target level. However, the central bank remains adamant that core prices and underlying inflation in general remains on an upward trajectory.As such, they are defending that raising interest rates remains the right path for monetary policy. That despite also challenges from the government. Hence, resulting in all the “evidence” being released in the past week in trying to prove to markets and the public that they are indeed the ones that are right.
This article was written by Justin Low at investinglive.com.

🔗 Source