BOJ June minutes: Inflation expectations have weakened recently

Bank of Japan Minutes from June 15 and 16 meeting are out, with the Central Bank noting that inflation expectations have weakened recently, As a reminder to readers, the June minutes were a non-event, with all the focus placed in the recently published July decision.

The BOJ notes: "With regard to inflation expectations, members shared the recognition that these had weakened recently, although they appeared to be rising on the whole from a somewhat longer-term perspective. As background to this weakness, one member pointed to such factors as the deterioration in consumer sentiment, due mainly to the turbulence in global financial markets since the start of 2016, as well as the effects of an earlier fall in energy prices and of the appreciation of the yen."

BOJ minutes added: "On this basis, the member expressed the view that, in a situation where economic fundamentals had been resilient, inflation expectations were likely to gradually see an acceleration in their rate of increase as the improvement in the output gap progressed on the back of tight labor market conditions and an uptrend in business fixed investment."