Difficult for core-CPI to accelerate – BOJ’s Kiuchi

FXStreet (Mumbai) - Bank of Japan (BOJ) board member Takahide Kiuchi was on the wires last minutes, noting that the Japanese economy remains exposed to external headwinds. Mr. Kiuchi also said that he doesn’t think that the economy is in recession and warned that longer period of accommodative policy will have increased side-effects on growth prospects.

Key Quotes:

Wholesale prices expected to continue falling for time being due to commodity prices

Consumer prices likely to be around zero for time being due to Oil prices

Economy likely to emerge from recent pause, grow above potential in FY 2016

Don’t think Japan's economy is in recession

Overseas economies are major downside risk for Japan

July-Sept GDP could turn out to be positive

Sharp drop in exports to hurt capex, jobs

Expect capex to peak out in FY 2017 given current growth expectations

See increasing risk Japan investors will want to hold more JGBs, which could make BOJ's quantitative easing more difficult

If long term rates rise due to worries about BOJ's JGB purchases, impact could be serious

Worries about BOJ's balance sheet could be negative for currency stability

Difficult for core-CPI to accelerate from here on

Not optimistic about next year's wage negotiations