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Japan facing uphill battle against stubborn deflation: BBVA
Deflation should ease by 2014.
Japan has reported December CPI of -0.1% y/y (consensus: -0.2%), which BBVA said highlights the difficulties the BoJ will face in reversing deflation.
"Under pressure from the government, the BoJ adopted a 2% inflation target at the conclusion of its monetary meeting on January 22, and launched unlimited quantitative easing (starting in 2014), aiming to end deflation and boost Japan’s sluggish growth momentum. We expect average inflation of 0.1% in 2013, and for deflation to end more convincingly in 2014, with inflation increasing to around 1%," BBVA added.
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