BoJ focused on ‘underlying trend of prices’
Policy board members stress need to look through ‘temporary fluctuations’ when forecasting
Members of the Bank of Japan's (BoJ) policy board stressed the need to "accurately gauge the underlying trend of prices" in their August meeting, according to minutes published today.
The BoJ is trying to achieve annual CPI inflation of 2%. When forecasting inflation, however, the board subtracts "fresh food" from the basket of goods used to ascertain the headline figure, which it said represents the underlying trend in prices "relatively well".
In August, this measure of annual inflation rose to 1.3% and the board expects it to remain around this level for "some time". The minutes note that "it was necessary to capture such a trend, excluding the effects of temporary fluctuations, when forecasting developments in prices".
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