Japan: Bank of Japan Full Outlook Report Says Inflation Is Gradually Anchoring Around 2 Percent Target
The Bank of Japan said in the full version of its quarterly outlook report, published on November 2, that Japan has made gradual progress towards anchoring inflation around the central bank's 2 percent target, a judgement that bolsters the case for raising interest rates. The BOJ publishes the full version of its report on the market day after it concludes its policy meeting, at which it releases a summary.
In reaching its decision, the BOJ weighed up inflation expectations, firms' wage- and price-setting behaviour, and the degree to which households and firms act based on the assumption that prices will rise by around 2 percent, the central bank said. With underlying inflation moving around 2 percent and upside risks to prices warranting attention, interest rate hikes will likely alleviate price pressures and underpin consumption, the report said.
Firms' inflation outlook appears to gradually converge around 2 percent, while households' inflation expectations vary widely, the bank added. It also noted that in recent years, the share of wage increases at levels broadly consistent with a 2 percent increase plus labour productivity growth has risen, and that underlying inflation has risen toward a level around 2 percent over the past few years, with gradual progress toward anchoring it at that level.
Domestic consumption has recently been sluggish in real terms, the bank said, due to bad weather during the summer and a hit to spending from rising living costs. But consumption as a whole is likely to remain resilient, it said, partly thanks to government subsidies to curb fuel prices, higher stock prices and rising wages from a tight job market.
Source: GSM · USA (original Chinese edition)
Photo: 照片：日本银行总行大楼，Syced 摄，Wikimedia Commons，CC0 授权 / Photo: Bank of Japan head office, by Syced, Wikimedia Commons, CC0
