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What a letdown! Despite the prolonged downturn in spending and inflation, the BOJ still refrained from doling out additional stimulus in their latest policy statement. Heck, Governor Kuroda and his men don’t really seem to have plans of ramping up their easing efforts anytime soon. Here are the main takeaways from the event:

1. CPI likely to hit zero

oil price inflation yenSeveral economic analysts had already been warning that consumer price levels in Japan haven’t bottomed out yet, and BOJ policymakers shared this view in admitting that the CPI could slow to about zero percent for the time being.

As it is, overall inflation in Japan has tumbled to 0.2% – a long way off its 2% target – due to the slump in oil and its side effects on prices of goods and services. “Depending on oil price moves, we can’t rule out the possibility that core consumer prices will fall slightly year-on-year,” Kuroda pointed out.

2. BOJ isn’t worried about deflation

Interestingly enough, BOJ officials don’t seem to be too concerned about potentially weaker inflation. In fact, policymakers maintained their assessment that the economy will continue its moderate recovery. Just as in their previous statement, Governor Kuroda remained hopeful that cheaper energy prices would leave consumers with more cash to spend on other items, which would be good for overall spending.

“For now, I don’t think the underlying slowdown in inflation, driven largely by sharp falls in oil prices, will immediately affect the broad price trend,” Kuroda explained. He maintained that the Japanese economy can be able to reach its 2% target inflation in a couple of years.

3. Wage hikes to spur inflation and spending

One of the biggest reasons why BOJ policymakers are confident that inflation would pick up soon is the proposed wage hike across Japanese companies this year. Talks among firms, union leaders, and government officials are already underway as part of Prime Minister Shinzo Abe’s campaign to make sure that wages are keeping up with the rising cost of living in the country.

If these plans push through, the BOJ and the Japanese government could hit two birds with one stone. For consumers, higher salaries would mean more moolah for purchases, which would support retail sales and household spending. For businesses, paying higher wages would lead them to increase their product prices to stay profitable, which would then put upside pressure on overall inflation.

All in all, these takeaways suggest that the BOJ ain’t likely to add to their ongoing quantitative easing of 80 trillion JPY each year. Of course this might still depend on whether or not the proposed corporate wage hikes would actually translate to stronger spending and inflation, but it could be safe to say that Governor Kuroda isn’t likely to pull the trigger anytime soon and that the yen could breathe a sigh of relief.