"The growth rate for fiscal 2014 would slow substantially compared with the previous fiscal year, as there would be a decline in demand from the front-loaded increase in demand prior to the consumption tax hike, mainly in the first half"
- BOJ Minutes
The Japanese economy is expanding and benefitting from Abenomics, this is not a question. Moreover, growth is poised to accelerate in the second half of fiscal year 2013, according to minutes from the board's October 31 meeting that were released on Tuesday. Japan is also following the right track to the 2% inflation target at a moderate pace. Nevertheless, some of the BoJ members are cautioned that the pace of growth is likely to slide considerably in the next fiscal year. During October's meeting Haruhiko Kuroda faced the biggest rift since the announcement of his unprecedented monetary policy stimulus in April, as three of the nine board members were dissident against central bank's rosy growth and price outlooks.
The latest economic outlook report showed the BoJ expects growth to stay at 1.5% in fiscal 2014, up from 1.3% expected in July. As to this fiscal year, the bank predicts an expansion of 2.7%, slightly down from 2.8% projected earlier. The outlook for 2015 year remained unchanged from July's prediction of 1.5%. With one member even saying he cannot judge yet whether the economy will reach 2% inflation as expected and taking into account global headwinds, the current projections could be revised to the downside in the nearest future.
© Dukascopy Bank SA