USD/JPY resumes its rally, putting the Japanese yen under devaluation.
The Japanese yen is experiencing a new wave of devaluation against the US dollar, with the current USD/JPY exchange rate at 140.05.
Goldman Sachs, the investment bank, has revised its inflation expectations for Japan, raising them even higher than the forecast of the Bank of Japan (BoJ). Their projections now exclude a decrease in the Consumer Price Index (CPI) below 2% in the coming months.
Despite this inflation outlook, the BoJ is unlikely to make any immediate changes to its credit and monetary policy on Friday. The adjustment of the monetary strategy is more likely to take place during the July meeting, where the central bank will update its inflation forecasts.
The forecast for the end of the fiscal year anticipates inflation in Japan to reach 2.8%, surpassing the previous estimate of 1.8%, specifically for consumer prices excluding fresh food, according to Goldman Sachs.
However, the latest statistics fall short of these ambitious expectations. The Corporate Commodity Price Index (CGPI) increased by only 5.1% in May compared to the previous month's reading of 5.9%. As a result, investor confidence in the BoJ's potential is waning, leading to a decline in the JPY exchange rate once again.