The Bank of Japan's semiannual Outlook for Economic Activity and Prices report indicates a shift in language regarding price risks, now stating that risks are 'skewed to the downside.' A research study suggests that further increases in inflation expectations are necessary to achieve the 2% price stability target. The study also notes weaker than expected improvements in private consumption, despite better than expected corporate profits and employee income. An empirical model shows a low likelihood of inflation reaching a 2% trend, with a higher probability of a 1% trend. The central bank chief acknowledges missing the original 2-year timeframe for inflation but emphasizes the importance of the government's fiscal consolidation plan.
documents/vol00010-efta01358353-pdf.pdf
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