Analysts at TD Securities note that on expected lines, BoJ left policy unchanged in a 7-2 vote, but cut the FY2019 core CPI forecast to 0.9% from 1.4% in what appears to a larger than expected slashing of the forecast and downgraded its assessment of current CPI.
Key Quotes
“BoJ noted that the CPI forecasts exclude the free education effect, which effectively points to even lower inflation when implemented. GDP for the fiscal year 2018 was also cut to 0.9% from 1.4% previously while FY 2019 GDP was revised marginally higher to 0.9% vs. 0.8% previously, likely due to a lower base in the previous year than any expectation of an acceleration in growth.”
“The large cuts in both growth and inflation estimates suggest the view that the BoJ will be in no rush to alter policy over coming months. JPY weakened in the wake of the outcome, but we think any drop will be short-lived.”
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