Today's BoJ policy meeting, as anticipated, maintained the monetary policy status quo. While higher energy and commodity prices are expected to raise headline CPI inflation temporarily above 2% in the coming months, there's little concern about sustained high inflation. Pricing power among companies remains weak, and wages continue to be stagnant. Acknowledging the limited power of monetary policy to stop supply-side-driven inflation, the government has been trying to contain public dissatisfaction via fiscal measures, such as petrol subsidies.
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