BOJ plans to conduct analysis on inflation dynamics – sources

A Japanese yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration

TOKYO, Jan 14 (Reuters) – The Bank of Japan plans to conduct a thorough analysis of the country’s price dynamics and assess whether recent signs of rising inflation will last, two sources familiar with its thinking said. .

The central bank may release some of the findings from a quarterly outlook report due during next week’s policy review, and ask Governor Haruhiko Kuroda to elaborate during his post-meeting briefing, said one of the sources.

The BOJ board could also issue an order at next week’s policy meeting for staff to consider whether the current inflation is sustainable and under what mechanism it could go forward, and submit a report. on the council as early as March, another source said. familiar with his thinking.

There is no final decision yet, which will be taken at the two-day policy meeting that ends on Tuesday.

At the meeting, the BOJ is expected to keep monetary parameters unchanged and revise upwards its inflation forecast for the fiscal year beginning in April, sources told Reuters. Read more

While inflation remains well below the BOJ’s 2% target, a recent spike in global commodity costs has prompted more companies to raise prices. Recent surveys have shown that widening price gains change public perception that deflation will persist.

Some analysts expect core consumer inflation to top 1.5% around April, as last year’s drop in mobile phone charges fades and past increases in mobile phone costs oil drives up electricity bills.

Many BOJ policymakers view this cost inflation as transitory and unsustainable unless accompanied by higher wages.

With the rise driven by higher commodity prices, rather than an expected slight uptick in domestic demand, the BOJ’s near-term priority is to avoid a temporary halt in inflation n is fueling market speculation of an early policy tightening. Read more

In the policy outlook debate, the BOJ will focus on whether wages would rise enough to give households purchasing power, allow businesses to continue raising prices and sustainably accelerate inflation, the report said. other sources.

Kuroda has repeatedly underlined the BOJ’s willingness to maintain an ultra-accommodative monetary policy until inflation reaches its 2% target sustainably.

Reporting from the Tokyo newsroom; Editing by Kim Coghill

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