BoJ policymakers determined to bring CPI back to target
Rate-setters at the Bank of Japan continue to be clearly-focused on bringing inflation back to their 2% target on a sustainable basis, details of their last policy meeting revealed.
According to the Summary of Opinions at the BoJ's 20-21 December meeting, released on Thursday, policymakers appeared to be nearly unanimous in stressing the need to maintain the current policy settings.
Nevertheless, some market watchers picked-up on one BoJ board member's observation that once the economy and prices are expected to continue improving, then "the situation may occur" where the BoJ will need to consider adjustments, including the need to strengthen the "sustainability" of the framework for its policy of QQE with Yield Curve Control.
As regards the behaviour of prices, another rate-setter pointed out recent "very encouraging" price-setting on the part of firms. That was in-line with the first positive reading on the diffusion index for changes in output prices, in the December 2017 Tankan survey, since September 2008, the same policymaker said.
Consumer prices in Japan advanced at a 0.6% pace year-on-year in December and by 0.9% when the cost of food is excluded.
However, if energy prices were stripped out as well then the rate of gain in CPI was just 0.3%.
Yet for fiscal years 2017 and 2018, the Cabinet Office was projecting gross domestic product would expand by roughly 1.9% and 1.8%, respectively.