Bank of Japan to Face Inflation Showdown

The Bank of Japan is set on Friday to project that it will meet its 2 percent inflation target in two years, a forecast analysts say may be too optimistic and could put the bank’s credibility on the line.

The central bank, charged with overturning years of dogged deflation, is not expected to come up with any fresh policy initiatives after new Governor Haruhiko Kuroda stunned markets on April 4 by promising to inject about $1.4 trillion into the economy to hit the inflation target in roughly two years.

Instead, the focus will be on the BOJ’s economic forecasts to be released in its twice-yearly outlook report and how they compare with private-sector economists, many of whom argue that 2 percent inflation in two years is unrealistic.

“These new BOJ figures will be more a vow of determination rather than credible forecasts,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo.

via Reuters

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