BoJ Quarterly Outlook Report: Risk to inflation skewed to upside for fiscal 2023, 2024

The Bank of Japan’s (BoJ) published its quarterly outlook report, following its July policy meeting, with Reuters citing key highlights from the report.

Key takeaways

Risk to inflation skewed to upside for fiscal 2023, 2024

Japan's economy is recovering moderately

Inflation expectations showing signs of heightening again

Japan's economy likely to continue recovering moderately

Japan's economy to continue expanding above potential

Wage growth has risen, signs of change have been seen in firms' wage, price-setting behaviour

Inflation expectations have shown some upward movements again

If upward movement in prices continue, effects of monetary easing will strengthen through decline in real interst rates

Strictly capping long-term yields could affect bond market functioning, volatility in other markets

Such effects are expected to be mitigated by conducting yield curve control with greater flexibility

If downside risks to economy materialise, effects of monetary easing will be maintained through decline in long-term yields under yield curve control framework