Ex-BOJ’s Momma: Central bank’s policy seen on hold despite CPI rise

Bank of Japan (BOJ) policymakers will keep policy unchanged even though consumer inflation will continue rising for a further six months, former BOJ Chief Economist Kazuo Momma predicted, in an MNI interview on Monday.

Additional quotes

"Core CPI this fiscal year on average is expected to rise above the BOJ's median forecast of +2.3%,"

“The BOJ won't be able to exit its strategy of easy policy until inflation stabilizes around 2% for at least two years.”

"Unless the US economy falls into recession, it will not be able to show a path pointing to inflation falling to appropriate levels.”

"The extreme views are that the mismatch will be corrected completely and the mismatch will not be corrected completely (leaving unemployment at 4% or 7% respectively). I'm in the middle of these and the U.S. unemployment rate could rise to around 5%.”

Market reaction

At the time of writing, USD/JPY is trading at 137.17, off the 137.43 highs while still up 0.18% on the day.

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