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30 Mar 2015
Japanese inflation returns to zero - Nomura
FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, breaks down the latest Japanese inflation numbers, noting that BOJ is unlikely to react to lower inflation owing to lower oil prices.
Key Quotes
February core CPI inflation was weaker than the market and we expected. February core CPI inflation slowed to +0.0%, after excluding the consumption tax hike impact, the lowest since May 2013, just a month after the BOJ introduced its QQE programme.
BOJ Governor Kuroda said lower oil prices since mid-2013 were the biggest surprise for him since he took office in 2013, and lower oil prices sent Japanese inflation to almost the same level before QQE was introduced.
March Tokyo core CPI inflation was unchanged at +0.3% after excluding the tax hike impact, but our economists expect Japan core CPI inflation to dip below 0% temporarily.
BOJ Governor Kuroda and the dovish new board member Mr Harada suggested the BOJ is unlikely to react to lower inflation owing to lower oil prices, while it views its impact on inflation expectations as more important. Thus, the lower-than-expected inflation data released today do not necessarily suggest the BOJ will consider easing immediately.
We will monitor the impact of lower inflation on inflation expectations, and there are two important sets of inflation expectations data next Thursday from the BOJ.
Key Quotes
February core CPI inflation was weaker than the market and we expected. February core CPI inflation slowed to +0.0%, after excluding the consumption tax hike impact, the lowest since May 2013, just a month after the BOJ introduced its QQE programme.
BOJ Governor Kuroda said lower oil prices since mid-2013 were the biggest surprise for him since he took office in 2013, and lower oil prices sent Japanese inflation to almost the same level before QQE was introduced.
March Tokyo core CPI inflation was unchanged at +0.3% after excluding the tax hike impact, but our economists expect Japan core CPI inflation to dip below 0% temporarily.
BOJ Governor Kuroda and the dovish new board member Mr Harada suggested the BOJ is unlikely to react to lower inflation owing to lower oil prices, while it views its impact on inflation expectations as more important. Thus, the lower-than-expected inflation data released today do not necessarily suggest the BOJ will consider easing immediately.
We will monitor the impact of lower inflation on inflation expectations, and there are two important sets of inflation expectations data next Thursday from the BOJ.