• Risk of price growth undershooting BOJ forecast
  • Risk to Japan economy – Europe debt woes, US fiscal cliff, China slowdown
  • Weakness in manuf. sector hurt job mkt for time being
  • Weak exports & output may cause some firms to postpone capex
  • Exports. output likely to pick up as overseas economies emerge from slowdown
  • Output gap to remain relatively large for time being but eventually improve moderately
  • Overcoming deflation requires collective effort by govt, BOJ & private firms
  • Will continue to consider how BOJ can best contribute to beating deflation