Following are the key highlights from the BOJ’s quarterly outlook report, published alongside the monetary policy statement on Tuesday.

Expect financial intermediation to play out smoothly under financial system stability.

Likely to avoid downward pressure strengthening on real economy from financial front.

Japan’s financial system remains stable as a whole.

Japan’s economy likely to improve as a trend but pace of recovery to remain moderate.

Japan’s consumer prices likely to fall for time being.

Risks to economic outlook skewed to downside for time being.

Downside risks bigger on price outlook.

Consumer inflation to gradually accelerate as effect of cellphone fee cuts taper off.

Exports, output continue to increase.

Capex showing some sign of weakness but picking up.

Inflation expectations flat.

Pick-up in consumption stalling due to downward pressure on service spending.

BOJ’s forecasts based on assumption that vaccine rollouts will ease impact of pandemic

Exports likely to continue increasing steadily even though strength in auto shipments to slow for time being.

Consumption expected to pick up again after stalling due to weakness in face-to-face service spending.

Consumer prices to keep falling slightly due to impact of pandemic, cellphone fee cuts.

Impact of cellphone fee cuts on CPI likely temporary, when excluding this factor inflation likely to move on firm note.

Medium-, long-term inflation expectations likely to heighten as consumer inflation turns positive.

It will take time but inflation will gradually accelerate towards BOJ’s target.

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