And tonight we have the Japanese Inflation data out

Nikkei has this article about the Japanese Center for Economic Research’s poll among 40 private sector economists who in majority call for some kind of move by the BOJ if inflation stablises at 1% or (7 of them) act now , either on the ETF buying, the target cap for 10yr yields to leave the 1% mark or or shorten the length of JGB maturities.
Only 5 see the need to wait for the 2% inflation target to be reached.

Now there’s inflation and inflation in Japan… The overall gauge is above 1% , 1.4% latest, expected to show an increase to 1.5-1.7 % this month .But then we have the core (ex-fresh food) which we mostly look at ,expected to rise from 0.9% to 1.0% yipiiee . But that’s not Boj’s favourite : There’s the core core CPI version ex-fresh food and energy (right no one drives a car or puts on the heater in winter or aircon in summer in Japan) , which is expected to show 0.5% this month from 0.4% last. That’s a real good one to hide behind for Kuroda and friends as the risk is  low for this one to reach one , let alone 2% in the immediate future.

But back to the JCER economists’ poll. It’s an interesting evolution to see they ‘re actually calling for BOJ to lower it’s inflation target now. Even if BOJ stands pat and will not change much to their policy in the near future( especially with USDJPY close to 105 …), we still did get each of Kuroda, Wakatabe and Amamiya mention no later than this month there could be some kind of move before the 2% inflation target is met if conditions would allow so. I’m not saying they will soon but the “economic conditions” should comprise wages , where most companies will rise them this Spring and may be surpass the 3% mark, where Abe promised them tax reliefs.

In current context of tax and trade wars, it’s easily overlooked what the local economists are saying but we should not lose sight of it. It’s the end of the fiscal year in Japan this month. I reckon every month is important from now, especially if the barometer keeps rising steadily . It would also pretty well fit in my JPY scenario fro this year, that in Spring, JPY will blossom.

Funny enough , Reuter’s monthly poll saw a fair part of their interviewees calling for BOJ to push back the first change to their monetary policy.
Free to pick a side , I found the JCER much more fun as a trader

Safe trading and happy hunting


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