Next year’s Shunto will disappoint the BoJ

Ueda’s speech in the Diet on Tuesday left open the possibility of the Bank adjusting monetary policy before the policy review announced at the April meeting is completed next year. However, given that the labour market will continue to soften, inflation is set fall in the second half of the year and market pressure on the Bank's 0.5% ceiling for JGB yields should subside, it's hard to make the case that the Bank's 2% inflation target will be met on a sustained basis.