Inflation likely to slow, then re-accelerate as wages rise

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The Bank of Japan’s (BoJ) published its quarterly outlook report, following its October policy meeting, with key highlights noted below.

Key takeaways (via Reuters)

Japan’s economy likely to continue recovering moderately.

Inflation likely to slow, then re-accelerate as wages rise, inflation expectations heighten.

Uncertainty over Japan’s economic, price outlook very high .

Must be vigilant to financial, FX market moves and their impact on Japan’s economy, prices.

Risks to price outlook skewed to upside for fiscal 2023.

Must scrutinize whether positive wage-inflation cycle will strengthen.

Inflation expectations heightening moderately.

Must be mindful that uncertainty regarding outlook is very high but trend inflation to gradually accelerate towards BoJ’s price target.

Board’s core-core CPI fiscal 2023 median forecast at +3.8 % vs +3.2% in July.

Board’s core-core CPI fiscal 2024 median forecast at +1.9% vs +1.7% in July.

Board’s core-core CPI fiscal 2025 median forecast at +1.9% vs +1.8% in July.

Board’s real GDP fiscal 2023 median forecast at +2.0% vs +1.3% in July.

Board’s real GDP fiscal 2024 median forecast at +1.0% vs +1.2% in July.

Board’s real GDP fiscal 2025 median forecast at +1.0% vs +1.0% in July.

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