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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Sep 07 2012

Deflation Demon Prodding Bank of Japan

ECRI has just updated its Japanese Future Inflation Gauge (JAFIG). The value of this forward-looking gauge lies in its ability to predict cyclical turns in Japanese inflation.

As deflation reemerges with the level of the Japanese CPI continuing its fall in July, there is growing concern that economic growth will contract in the second half of 2012. Given that the near-zero benchmark rate limits the Bank of Japan’s (BoJ) policy tools, many expect the bank to expand its asset-purchasing program to try and boost inflation and economic growth.

The JAFIG’s latest update provides insights into the future trajectory of Japanese CPI growth, signaling whether the BoJ will be compelled to act in the coming months.

Related News & Events

Eurozone Inflation Pressures Stay Weak

Economic Times September 7, 2012

As anticipated by the earlier downturn in the Eurozone Future Inflation Gauge, euro zone inflation has fallen in recent months. More