- BoJ minutes
While some Bank of Japan board members appeared to be worried about weak consumer price gains in Tokyo, others believed that the underlying trend remained in line with the central bank's outlook. The BoJ is likely to reach its 2% inflation goal around the first half of fiscal 2016, according to minutes of the central bank's May policy meeting. Policy makers also warned that industrial production could weaken in the short run, but the overall economy would remain on a recovery path, supported by strong domestic demand. Yet, economists predict growth of the world's third largest economy to slow in the April-June period, after the strong 3.9% expansion in the beginning of the year. Minutes also indicated there were some worries that price gains could slow as well. Data due on Friday are expected to show Tokyo's core CPI rose an annual 0.1% in June, while nationwide core CPI is forecast to be unchanged in May. BoJ Governor Haruhiko Kuroda and other board members have argued that inflation will accelerate quickly from the autumn of this year as last year's plunge in oil prices falls out of the annual calculations. With its reluctance to add to record monetary stimulus even as inflation remains well below its target, the BoJ has stoked speculation about it scaling back its asset purchases as soon as early 2016. Yet, economists think potential reduction of bond-buying program might more likely be caused by the lack of liquidity in Japanese government bond market than by the inflation outlook.
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