BOJ Less Confident on Inflation, Even Though Forecast's the Same

(Bloomberg) -- The Bank of Japan today forecast that inflation in the fiscal year starting next April will be 1.8 percent. That’s the same as the forecast three months ago, but when you look under the hood, you’ll see the board is less confident than it was then.

The highest forecast from the nine board members this time was 1.9 percent, whereas in January, two people estimated price gains would be at the level of the 2 percent target. And seven board members aren’t that confident in their forecasts -- they think risks are weighted to the downside.

And while the board thinks inflation will be 1.8 percent again in 2020, they’re even less confident about that -- eight of the nine members think risks are weighted to the downside.

Some of the changes may be due to new faces on the board. Two new deputy governors have arrived since January, when the last forecasts were released. Still, while the BOJ may emphasize that the projections through fiscal 2019 are "more or less unchanged," that’s only true in the aggregate.

Note: In the chart, the locations of ●, △, and ▼ indicate the board member’s forecasts to which they attach the highest probability. The risk balance assessed by each board member is shown by the following shapes: ● indicates that a member assesses "upside and downside risks as being generally balanced," △ indicates that a member assesses "risks are skewed to the upside," and ▼ indicates that a member assesses "risks are skewed to the downside."

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