Japan's core inflation reading fell for two consecutive months, the first time since April 2016
Maybe uphill is being too kind to the BOJ. This seems more of an unwinnable battle for Kuroda and co. surely. Inflation readings continue to disappoint and trend lower as Q2 begins, and this is nowhere near where the BOJ wants it to be in order to move forward and normalise monetary policy.
The BOJ often refers to the core inflation gauge - which came in at +0.7% y/y - but in actual truth if you strip out energy prices from that core gauge, it gets even uglier. The "core-core" reading only came in at +0.4% y/y. That is miles off the 2% inflation target that the central bank is so adamant on abiding by.
It's almost certain that the central bank is not going to meet its now invisible target of normalising policy by fiscal year 2019, even if Kuroda continues to put up a confident facade - I mean it's part of his job to do so. The real question now will be how much more can the BOJ push the limits of its easing policies, especially now in an environment where global yields are rising.
And let's not forget about the size of the BOJ's balance sheet while we're at it too. They've basically consumed the Japanese bond and ETF markets by now, so at which point will enough be enough for the BOJ?
They probably can go on with this for the next three to four years, but you have to wonder after that if things still stay the same, it does look like the BOJ may well have to keep monetary policy on hold perpetually.
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