The main agenda item at next Thursday’s meeting of the Bank of Japan’s Policy Board will be the new GDP and inflation forecasts to be published in the Bank’s “Outlook for Economic Activity and Prices”. This report is likely to be upbeat, which may dampen expectations that the Bank will step up the pace of its asset purchases any time soon. Indeed, we are pushing back our forecast for the announcement of additional monetary easing to October next year. Nonetheless, with underlying inflation set to remain well below the 2% target, the Bank still has a lot more work to do.
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