Risks to Japan’s price outlook are more or less balanced

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Risks to Japan’s price outlook are more or less balanced“said the Bank of Japan (BoJ) in its quarterly outlook report that accompanied the monetary policy statement on Monday.

Additional comments

The economic rebound of Japan is becoming clearer.

The inflation expectations rise moderately.

Consumer inflation is in slightly positive territory.

The Japanese economy is likely to recover.

It is likely that the Japan’s consumer inflation accelerates.

Japan’s consumer inflation will continue to hover around 1% until the end of the BoJ report’s projection period.

Households will accept price increases as wage gains accelerate.

Rising core inflation is likely to raise household and business inflation expectations, pushing prices higher further.

The business cycle will strengthen as rising incomes increase spending, including that of households.

Earners’ incomes are likely to rise gradually, reflecting higher wages for sectors facing labor shortages.

Japan’s consumer inflation is likely to gradually accelerate towards the BoJ’s target.

Japan’s financial system remains stable as a whole.

Japan’s financial intermediation may stall if bank profits come under prolonged pressure from COVID-19.

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