Nomura had predicted a +0.1% y.o.y. CPI for May, following April’s -0.3%, which they attributed to a one month blip, with sustained growth occurring later. The profile, however, has now been shifted up, meaning inflation will be in sustainable positive territory from this point forward, according to the Japanese analysts.
This new forecast anticipates core and headline CPI to converge at the lower half of the new target for next year.
“We believe as long as CPI inflation over the outlook path remains within the target range and in the long end is in the lower half – as our forecast and the MNB’s last published one is – so it can continue cutting and rate hikes are difficult to see in the next year,” Nomura said.
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