BoJ still of the mark? – Nomura

FXStreet (Guatemala) – Analysts at Nomura explained that there is little probability of all-Japan core CPI picking up sharply in December.

Key Quotes:

“The latest data showed the all-Japan core CPI rising more than the consensus forecast, but that was attributable chiefly to the all-Japan core core CPI.

Looking at individual categories, however, there was a marked boost from overseas package tours and accommodation charges, where prices are volatile. Considering the lack of any accelerated rise in the Tokyo core core CPI, which provides a pointer for the all-Japan core core CPI, we also see little prospect of the latter rising sharply in December.

All-Japan core CPI could hold flat y-y for time being depending on oil price

Based on the assumption of a gradual rise in crude oil prices (as of 14 December, our Japanese economic outlook envisages a North Sea Brent price of USD52.9/bbl at end- FY15 and USD58.9/bbl at end-FY16), we think it likely that the all-Japan CPI will turn up y-y as the negative contribution from energy prices drops away.

Oil prices, however, have fallen significantly since the start of December. If the North Sea Brent price were to hold around USD35/bbl, the all-Japan core CPI inflation rate could in our view well stay around ±0% for the time being.”

Analysts at Nomura explained that there is little probability of all-Japan core CPI picking up sharply in December.

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