Inflation hitting 3% is unlikely to budge Bank of Japan (BOJ) Governor Haruhiko Kuroda to move towards monetary policy normalization, the latest Bloomberg survey of economists showed.

Key findings

“16 of 19 analysts said that a further acceleration to 3%, the highest since 1991 excluding tax-hike years, wouldn’t increase the likelihood of policy change before Kuroda’s term ends in April.” 

“That’s because economists say inflation needs to remain at 3% or more for at least half a year before a policy shift can happen.”

“Economists have flagged that inflation isn’t the sole metric that would trigger a policy shift. “

“The need to also look at the state of paychecks, the impact from any slowdown in the global economy and moves in the yen.”

“While economists say that half a year of core inflation at 3% may trigger a policy shift, that’s not their base case. Japan forecasters expect inflation to hit 2.5% in the final three months of 2022 and then peak out toward 1% at the end of next year.”

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