BoJ keeps rates unchanged and revised inflation forecasts


BoJ keeps rates unchanged and amends the time frame for its 2 percent inflation target on Tuesday. What is for Japan is 2017?

1 November, AtoZForex The central Bank of Japan (BoJ) was not likely to cut interest rates on Tuesday, yet was expected to concentrate on reviewing the time period for hitting its 2 percent inflation target, according to the forecasts of the market economists.

The forecasts have been justified – the central bank has held its policy steady and has extended the timing for reaching its inflation target by by as much as a year to “around fiscal 2018.”

Haruhiko Kuroda, the Governor of Boj, has stated:

“It’s true it’s taking a significant amount of time to eradicate the deflationary mindset that beset the economy during 15 years of deflation.”

BoJ keeps rates unchanged 

The principal and chief economist at Japan Macro Advisors, Takuji Okubo, believed that BoJ is about to extend the time frame for achieving its inflation target. Even though the central bank has never specified a date for reaching its inflation target, mentioning the time frame as “the earliest possible time,” the market economists believe this implied the end of 2017. Mr. Okubo has further stated:

“With the inflation rate currently at zero, I think it is no longer realistic. The BOJ would have to significantly delay its outlook to achieve its inflation target. “

In addition, the consumer price index (CPI) in Japan has dropped 0.5 in September from 2015, where the core CPI also diminished half a percent.

The overall health of Japanese economy has been also slowing down, where the industrial output in September was stable, the retail sales declined 1.9 percent on-year. Moreover, Japanese exports went down 6.9 percent from 2015, after dropping 9.6 percent in August.

2017 Japan outlook

Mr. Okubo’s forecast for Japanese economy in 2017 is appearing depressing, as he stated:

“I do believe that Abenomics has already failed and the market is starting to be aware of that. “

The Chief economist at Japan Macro Advisors further stated that the lack of inclusive structural reforms within Japanese economy implies that there would be lesser business confidence. This implies the future potential delay of investments and consumers spending.

A total of 28.1 trillion-yen ($265.30 billion) fiscal stimulus was injected into the economy of Japan this year, as Japanese officials approved the money, which included public-private partnerships and another government spending.

Earlier this August, the broader fiscal stimulus was approved by the Prime Minister of Japan Abe’s cabinet. A sum of 7.5 trillion yen in spending by the national and domestic governments and about 6 trillion yen from the Fiscal Investments and Loan Program was approved as new ‘fiscal measures.’

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