In the Summary of Opinions at the January 17-18 meeting, BoJ said, “a pick-up in Japan’s economy has become evident” and the economy is “likely to continue recovering moderately”. In fiscal 2022, it’s “highly likely to grow at a pace that is well above its potential growth rate”.
Though, attentions should be paid to risk of COVID-19 spread in China and that could have a “negative impact on Japan’s economy through downward pressure on external demand and amplification of supply-side constraints.”
CPI is expected to “exceed 1 percent” and may “momentarily rise to a level close to 2 percent” from April 2022 onward. It will then be “important to analyze what lies behind this inflation and whether it turns out to be sustainable.”
A member noted “the key factor in assessing the underlying trend in the CPI is developments in wages. In order for the CPI to increase as a trend, it is necessary that services prices rise along with wage increases.
