FXStreet (Delhi) – Research Team at BBH, suggests that the BOJ estimates trend growth to be around 0.5% while the normal economic variability means that negative prints will be common. Key Quotes “The economy expanded (0.3% quarter-over-quarter) in Q3 after contracting 0.1% in Q2. It looks like it contracted slightly in Q4. The BOJ insists that it is making progress in lifting inflation. Although it targets the rate excluding only fresh food, BOJ officials have been guiding investors to focus on the metric that does not include energy as well. The BOJ's two-day meeting will conclude the day after the December CPI figures are published. The key measure is expected to be unchanged at 0.9%. It has been trending higher since reaching 0.4% last April and May. There has been talk in recent days that the BOJ may extend what it calls Qualitative and Quantitative Easing, but we demur. Instead, we suggest the key issue for investors will be the BOJ's inflation forecasts. There are two elements to note. First is the inflation forecast for the fiscal year that begins 1 April. It is currently set at 1.4%. Trimming it is not significant, but pushing it below 1% would be important. It would increase the likelihood of more action, perhaps as early as April. The second element is the forecast for FY2017. It currently stands at 1.8%. The BOJ's target is 2%. A cut in this would signal fading confidence of reaching the target. That too could signal the likelihood of additional measures. Like other central banks, the BOJ wants to signal that it monitoring developments but does not want to feed investors anxiety by panicking. It will likely find some solace in the fact that in the second half of last week, the yen surrendered half of the gains recorded on a trade-weighted basis since the start of the year. It still remains nearly 4.75% above the early-December low. We note, though that it was government officials and not the BOJ who signaled their discomfort with the strength of the yen last week.” For more information, read our latest forex news.