In case you missed out on the earlier happenings with the BOJ today
- BOJ announcement - no change to policy but revisions to forecasts
- The Bank of Japan ... "is in no hurry to reach its 2% inflation target"
- Brand new year, same old Bank of Japan
- BOJ's Kuroda: Oil drop is key reason for downgrades in price outlook
- BOJ's Kuroda: Central bank will take additional measures if needed
- BOJ's Kuroda: Expects negative impact of sales tax hike to be limited
- BOJ's Kuroda: Vital to achieve inflation target first, then normalise policy
The softer inflation forecasts aren't entirely unexpected given the trend in inflationary pressures in Japan. As mentioned earlier, the core CPI reading for December 2018 as seen last week was +0.3% y/y and that highlights a decline from the +0.5% y/y reading in February 2018. It basically underlines that inflation isn't really going anywhere in Japan despite tighter labour market conditions over the past few months.
What that means in the bigger picture is that the BOJ is still in search for a solution to bring up inflationary pressures and in the meantime, don't expect them to make big/major changes to monetary policy until they are able to identify said solution - which may never happen.
Although Kuroda attempted to brush aside today's changes by attributing it to weaker oil prices and noting that it was just temporary, it is very much his job to stay optimistic and keep a confident front. Deep down, you can't really fault him if he actually doesn't believe that they will be able to hit the 2% inflation target during his second term. I mean, pretty much everybody else in the world doesn't at this point.
