Although data last week exhibited the continued struggles facing the Bank of Japan as they work to restore inflation to the 2.00% targeted by the Abenomics, the Central Bank struck a more upbeat tone in their latest outlook. GDP growth estimates for fiscal 2016 were upgraded to 1.40% compared to October’s forecast of 1.00% while 2017 was raised to 1.50% from 1.30%.
However, on the inflation side, the BoJ reaffirmed its earlier projection of 1.50% core CPI for 2017. Two voting members of the Central Bank continued to dissent from policy, with a 7-2 vote reaffirming the commitment to a strategy of negative interest rates, asset purchases, and yield targeting for government bonds. The resulting move after the announcement saw the Yen strengthen versus nearly all peers, with EURJPY under pressure after extending the previous session’s losses.