Thoughts on the BoJ you might not have heard but should consider

Inflation outlook set to improve

Firstly, due to its importance – although few seem to be discussing it in the heat of the moment – Japan’s inflation outlook, like the rest of the world, should greatly improve in the coming quarters.

Inflation should end up back below Japan's target, and, thus, will greatly relieve pressure on the new leadership at the BoJ and the government overall. Also noteworthy is that Japan's Western-style core CPI, which also excludes all food items, is only around 2% YoY now. No consensus forecasts are available for this latter figure, but it certainly seems that it should be significantly lower later this year. Also, crucially important to this topic is that Japan is likely the least inflationary country in the world, with workers hardly ever striking and rarely changing jobs for higher s...