The Bank of Japan slightly upgraded its price estimates amid supply shortages, although it continues to expect that the 2% inflation target will not be met for at least the next two years.
In its quarterly estimates, the BoD The bank forecasts that inflation will increase by 1.1% in the fiscal year until March 2023 and 1.1% in the following year, higher than the previous estimates of 0.9% and 1% respectively.
For the current fiscal year ending in March, the bank expects prices to be stable.
The pandemic has caused a shortage of goods and materials amid a global recovery in consumer demand. In the US, annual inflation in December stood at 7%, the highest level in four decades.
In Japan, businesses find it difficult to pass on costs to consumers, who for the most part do not see significant price increases.
While corporate commodity prices rose 9.2% in November and 8.5% in December compared to the previous year, consumer prices rose just 0.6% in November.
The bank also forecasts that the Japanese economy will grow by 2.8% in the current fiscal year, lower than the previous forecast of 3.4%.
The BoJ said it expects growth of 3.8% year-on-year for March 2023 and 1.1% next year, up from a forecast of 2.9% and 1.3% respectively.
Also, today it kept the target for short-term interest rates at -0.1% and the target for the yield on the 10-year government bond close to zero.
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Source From: Capital
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