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The Japanese yen trimmed declines on Thursday as the Bank of Japan’s governor said it was likely inflation of more than 2 per cent would be met later than 2018.

The yen recovered from an intraday low on the comments by Haruhiko Kuroda at a press conference this afternoon to be down 0.2 per cent at ¥111.24 per dollar.

Mr Kuroda said:

To start debate [about exit strategy] now would invite confusion from the market and thus it’s premature. The time to start on exit strategy is when we achieve the 2 per cent objective.

He added:

There’s a high chance of achieving 2 per cent inflation in the year to March 2019, but it may also take longer than that to go above 2 per cent stably.

The central bank kept its monetary policy on hold at its April meeting earlier today but upgraded its growth forecasts saying it expects real gross domestic product to grow by 1.6 per cent in the 2017 fiscal year, up from the 1.5 per cent growth forecast in January.

Japan’s consumer price index (excluding fresh food) is expected to rise 1.4 per cent in the 12 months ending March 2018, down slightly from a previous forecast of 1.5 per cent.

This so-called “core” measure of inflation is what the BoJ is trying to push toward 2 per cent.

Further out, the BoJ sees core inflation, reaching 1.7 per cent in the 2018 fiscal year, which ends on March 31, 2019. This was unchanged from the Bank’s January forecast.

And in the year after that, core inflation is expected to reach 1.9 per cent, excluding the effects of a proposed consumption tax rise.

Copyright The Financial Times Limited 2017. All rights reserved.
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