BoJ more concerned about direction than speed of inflation

The BoJ holds monetary policy unchanged on Friday, once again voting 8-1 to continue expanding the monetary base at an annual pace of JPY80trn (16% of GDP; details in this report). Rather than ease further in a bid to reach its 2% CPI price stability target "aroundH1 FY16 (April-September 2016),".  The central bank simply cut its FY15 and FY16 forecasts and said it now expects to reach that target six months later, notes Banclays.

In the recent CPI forecasts, a notable convergence is observed between the BoJ and market consensus, making the BoJ's projections look less like a target (or an expectations management tool) - as it previously appeared - and more like an outlook. 

The extensions in the timeframe for reaching the target have started to look routine, further implying that calendar-based forward guidance has been diluted. At this stage, the BoJ may be less concerned about timeframe and more concerned about whether prices are heading in the right direction, says Barclays.