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3 Apr 2015
Expectations for a BOJ easing to remain relatively strong - Nomura
FXStreet (Bali) - Inflation expectations in Japan have remained steady so far, notes Yujiro Goto, FX Strategist at Nomura, despite adding that market expectations for a BOJ easing at some point this year should remain relatively strong.
Key Quotes
"As Japanese core inflation hit zero percent in February again, market interest in its impact on inflation expectations has been increasing, because the possibility of BOJ easing still exists."
"Firms’ expectations for longer-term inflation (5yr) declined slightly to 1.6% from 1.7% in the March BOJ Tankan survey, while 1-3 yr inflation expectations remained unchanged, even after weaker inflation data and lower oil prices."
"We think the lack of acceleration in inflation expectations among corporates and households is a negative outcome for the BOJ as the Bank needs to upgrade its inflation expectations to achieve 2% inflation. Thus, we expect market expectations for a BOJ easing at some point this year to remain relatively strong."
"However, as the slowdown in inflation expectations was limited, the Bank is unlikely to consider easing in the near future, due to inflation slowdown. The likelihood of an easing in April remains limited."
Key Quotes
"As Japanese core inflation hit zero percent in February again, market interest in its impact on inflation expectations has been increasing, because the possibility of BOJ easing still exists."
"Firms’ expectations for longer-term inflation (5yr) declined slightly to 1.6% from 1.7% in the March BOJ Tankan survey, while 1-3 yr inflation expectations remained unchanged, even after weaker inflation data and lower oil prices."
"We think the lack of acceleration in inflation expectations among corporates and households is a negative outcome for the BOJ as the Bank needs to upgrade its inflation expectations to achieve 2% inflation. Thus, we expect market expectations for a BOJ easing at some point this year to remain relatively strong."
"However, as the slowdown in inflation expectations was limited, the Bank is unlikely to consider easing in the near future, due to inflation slowdown. The likelihood of an easing in April remains limited."