Japan: Key economic events ahead – GS

Analysts at Goldman Sachs enlist the key risk events out from Japan this week, with the main focus expected to be on the BOJ monetary policy decision.

Key Quotes:

“We keep our base scenario that the BOJ will ease further when it releases its next Outlook Report at the Monetary Policy Meeting scheduled for July 28-29.”

“We see easing measures as uncertain, but we believe that they will center on (1) increased exchange-traded fund purchases (to around ¥6 tn/year, from ¥3.3 tn), and (2) deeper negative interest rates.”

“For June CPI, we expect national core CPI to remain unchanged at -0.4% yoy. We forecast a 0.1 pp slowdown in the core-core CPI (excluding food and energy) to +0.5% yoy and a similar slowdown in the BOJ’s new core CPI (excluding fresh food and energy) to +0.5% yoy.”

“We forecast June production to increase 1.0% mom from -2.6% decline in May.”

“We expect overall retail sales to drop -1.0% yoy in June (May: -2.1%), and household real spending to come in at -0.5% yoy (May -1.1%).”