22 Dec 2014
BOJ does not see low crude prices as obstacle to reach inflation target – Nomura
FXStreet (Barcelona) - Research Analysts at Nomura comment on the recent BoJ policy meeting, noting that the central bank pointed towards the positive impact on the economy due to falling oil prices and failed to consider it as an obstacle to their inflation target.
Key Quotes
“In the BOJ's statement on monetary policy and the governor’s press conference on 19 December, the main focus was on any signs that the recent decline in the price of crude oil might impact the BOJ's monetary policy stance.”
“BOJ Governor Haruhiko Kuroda emphasized the bank's expectation that although lower crude oil prices would likely exert downward pressure on inflation in the near term, they should also have a positive impact on the economy through improved corporate earnings and an increase in households' real income levels, thereby providing a further boost to inflation.”
“On the subject of the expected inflation rate, which is a major focus for the BOJ, Mr Kuroda said that various household, corporate and economist survey data indicated that inflation expectations were holding up, adding that the latest BOJ Tankan for December had shown that companies were still expecting prices to register stronger growth. This was echoed in the wording of the statement on monetary policy, which said that "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective”."
“The BOJ has so far regarded an improvement in the output gap and a rise in expected inflation as key to the 2% inflation target being met, and based on the content of the governor's press conference, we think the bank does not at this stage see lower crude oil prices as an obstacle to that target.”
Key Quotes
“In the BOJ's statement on monetary policy and the governor’s press conference on 19 December, the main focus was on any signs that the recent decline in the price of crude oil might impact the BOJ's monetary policy stance.”
“BOJ Governor Haruhiko Kuroda emphasized the bank's expectation that although lower crude oil prices would likely exert downward pressure on inflation in the near term, they should also have a positive impact on the economy through improved corporate earnings and an increase in households' real income levels, thereby providing a further boost to inflation.”
“On the subject of the expected inflation rate, which is a major focus for the BOJ, Mr Kuroda said that various household, corporate and economist survey data indicated that inflation expectations were holding up, adding that the latest BOJ Tankan for December had shown that companies were still expecting prices to register stronger growth. This was echoed in the wording of the statement on monetary policy, which said that "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective”."
“The BOJ has so far regarded an improvement in the output gap and a rise in expected inflation as key to the 2% inflation target being met, and based on the content of the governor's press conference, we think the bank does not at this stage see lower crude oil prices as an obstacle to that target.”