In the Summary of Opinions at BoJ’s December 17-18 meeting, It’s noted that the economy is “not judged to have fallen into a deflationary situation again”. But year-on-year rate of core inflation has already turned negative due to “temporary factors”, and it’s likely to be negative for the time being.
However, there is a “risk” of the economy falling into deflation as “medium- to long- term inflation expectations have weakened somewhat”. Hence, “risks of sudden changes in financial markets, including foreign exchange rates, also continue to warrant attention.”
It’s “highly likely” to take more time to achieve the price target. Given that monetary easing will be “further prolonged” it’s important to to conduct an assessment for further effective and sutainable monetary easing.
One member warned, “if the economy falls into deflation again, positive economic developments, such as an increase in employment, will be hampered, and the opportunity for the economy to leap forward could be lost”
“The Bank should conduct the assessment with determination to never allow the economy to return to deflation.” the member added.
Gold trying to reclaim 1900, after drawing support from 4H 55 EMA
Gold opens the week sharply higher today as it drew strong support from 4 hour 55 EMA. It’s now trying to reclaim 1900 handle. More importantly, focus in on 1906.74 resistance. Firm break there will resume whole rebound form 1764.31. We’re seeing that corrective pattern from 2075.18 has completed with three waves down to 1764.31. Break of 1965.50 resistance should confirm our bullish view and target a test on this high. In any case, near term outlook will say cautiously bullish as long as 1819.05 support holds.