Reed Cavendish Wealth Management - BoJ Could Trim Inflation Forecast

Reed Cavendish Wealth Management - BoJ widely expected to reduce inflation forecasts as oil prices decline.

Analysts at Reed Cavendish Wealth Management say a gloomy global economic outlook and falling oil prices will likely prompt the Bank of Japan to reduce its inflation at next week’s rate review.

Although Reed Cavendish Wealth Management analysts say the BoJ’s targeted 2 percent inflation may be unrealistic in light of recent global economic developments, the bank is expected to maintain an optimistic view of the country’s economy as a whole.

Reed Cavendish Wealth Management analysts believe the BoJ will leave its monetary policy unchanged at its rate review due to take place next week but that its inflation forecast will almost certainly be trimmed from its current average of 1.4 percent. Reed Cavendish Wealth Management analysts say the size of the forecast reduction cannot be determined at this point but that the inflation rate could be reduced by as much as 50 percent over the next six months.

While oil has been the primary factor influencing Japan’s inflation recently, promises of free preschool education could also add to the risk of lower inflation. Japan’s government has promised to offer free schooling for preschool children in an effort to gain support for its planned tax increase.

In addition, Japan’s Prime Minister, Shinzo Abe has been calling on mobile phone companies to reduce their fees by as much as 40 percent. Reed Cavendish Wealth Management analysts say that if these reduced mobile phone charges were to be implemented they could also drag down inflation.

Source: Reed Cavendish Wealth Management

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