Well, no surprises here. Pretty much as expected, we knew they
had given everything Governor Kuroda has been saying recently about no need to
renew, reduce monetary stimulus because the economy is still in need of it.
And inflation, yes, it's going to rise. In fact, they do see the core CPI ex
energy up to about one point six percent over the next couple of years, up to one
point eight. They did.
They did a much bigger upward revision in their core CPI for this year.
That's not DAX energy. This is at minus fresh food.
That's going to be at two point nine percent versus their previous forecast
with two point two. They also say the risks for inflation
are the upside, but they also see risk for growth to the downside.
And in fact, one of the things coming out of this policy statement is it that
the BMJ will add to easing without hesitation there, repeating something
they've been saying for a while. And they say they're saying this even as
they're saying that they're seeing strong fluctuations, sharp fluctuations
in the currency market. They're going to keep buying the 10 year
BS every day.
So don't try to bust through those yield curve control ceilings.
They have to meet. They need to watch the foreign exchange
impact on the economy. We saw that statement that went along
with the new budget this week saying that the government expects the Bank of
Japan to watch the effect of the weekend on the economy.
So they're certainly giving that a nod. Of I think it's interesting that this is
the day when this stimulus plan came out, the new budget from Premier Kishi
that the prime minister, 490 billion dollars worth.
That's an extra 200 billion over what people are expecting.
And I think I just want to reiterate a point that talk RTS Ito Club University,
nobody was at the Ministry of Finance and other government agencies with
Governor Kuroda years ago. And he said, look, why would when
they're making this this big stimulus package, when they're increasing their
debt and their deficit. Why would they want someone to go from a
very easy stimulative policy to keep rates low, then lets it go higher and
increase the cost of that financing? So I think that's we're trying to figure
out sometimes either went against weakening and liberalization, do
something, why don't they? Why isn't the government pushing more in
that direction? Well, I think that's certainly a reason
there has lead. I don't know if we'll hear any questions
on that at the press conference. But that's what we're going to get.
We're going to get more color to all of this.
Right. Endless questions from reporters.
He'll go as pretty much as long as they need to go.
That's I think we might get a little more juicy stuff for now, as expected.
But it's lines in the sand for Governor Kuroda.
Well, we talk about how the BMJ raised its core CPI data, but still the
projection is below 2 percent. And, of course, the DOJ highlighting
warning about extremely high uncertainties.
What might we see from the DOJ going forward, Kathleen?
Well, look, Governor Kuroda has said and again, I think we'll probably hear more
of this from the press conference when he can actually speak.
This is a policy statement and they lay out the roadmap is that, yes, inflation
is going up now, but a lot of that is commodity prices, food and energy
prices, that kind of thing. That isn't sustainable.
That's expected to come down. And that's the big, bigger Japan
forecast. And what you need to see is wages rising
and wages are rising a little bit. But that's a sustainable increase in
inflation. That's what Governor Kuroda says he
wants to see. Now, yes, there's been there's a lot of
grumbling in Japan about the weekend and what it means for households and
businesses. Government could probably address that,
but I think address anything about currency is very, very gingerly.
Just so he doesn't, you know, throw a match to the fire of the yen bears that
might want to try to do what they did at the last meeting, which kind of fire
things up, force the government intervene.
I don't expect that to happen today, but certainly I think some reporters are
going to try to get something like that out of him.