Goldman Sachs’ 2 reasons the BOJ won’t go up in 2023, and 2 moves the BOJ could make instead


Based on Goldman Sachs Japan outlook for the year ahead.

GS expects core CPI inflation (excluding fresh food) to slow after peaking at around 3.5% at the end of 2022, but will remain above 2% for most of 2023″largely due to the cumulative impact of the weak yen which took center stage“.

GS on “tThe BOJ has positioned wage growth of at least 3% as a prerequisite for stable achievement of its 2% inflation target“:

  • We expect an acceleration in base wage growth reflecting high inflation effectively offset by a deceleration in bonuses and other wages mainly due to a slowdown in corporate earnings growth, leading to broadly stable overall wage growth at a just under 2%.
  • stable wage growth of 3% still seems a distant prospect

So follows Goldman Sachs’ outlook for Bank of Japan policy:

  • We don’t expect an explicit rate hike…in 2023, primarily due to the aforementioned wage factor and the Kishida administration’s concerns about the global slowdown.
  • That said, adjustments to forward guidance with an easing bias and a widening of the 10-year yield band in 2023 are possibilities, in our view.

Goldman Sachs Yen Forecast:


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