BOJ Dimmed Economic Outlook Needs Stimulus to ReachTarget

The annual core consumer inflation of Japan remained the same in October from September as companies hold price hikes amid the weakened household spending. It also shows that there is not enough momentum to reach the 2 percent target of the central bank.

Moreover, the nation’s core consumer price index, excluding volatile food costs, grew to 1.0 percent in October from 12 months earlier based on the government data on Thursday, which is in line with the median market forecast.

The central bank of Japan might have a hard time in reaching price growth amid the global trade frictions and sluggish Chinese demand that dims the outlook being an export-reliant country and half of the profits were covered by driven by higher energy costs.

For three consecutive months, the inflation was recorded to have grown by 0.4 percent in October based on an index excluding the effect of both fresh food and energy costs.

The chief economist at Norinchukin Research Institute, Takeshi Minami, said that it may take a while to reach the BOJ target.

BOJ Governor Haruhiko Kuroda reassures that they will be patient to keep the massive stimulus program as inflation is still far from the target.

Despite the unexpected side-effects of dropping financial institutions’ profits of almost zero interest rates for years, the central bank will likely keep the stimulus and weakened inflation might affect solid economic growth and lead to higher prices.

Further worsening of negative impact on the stimulus, the BOJ will focus on inflation as the main policy consideration.