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Quick take: Japan's central bank will boost stimulus by end of Q2 '15: HSBC

JAPAN'S annual core consumer inflation slowed to zero year-on-year in February, from 0.2 per cent previously, according to data released earlier on Friday by its Ministry of Internal Affairs and Communications.

The data showed that growth had been the slowest since May 2013, keeping the central bank under pressure to expand monetary stimulus later this year.

"We think the central bank will boost stimulus by the end of Q2 CY15, in response to a likely fall in household inflation expectations," HSBC economist Izumi Devalier said in a note.

She noted that a 2.1 per cent year-on-year fall in the energy component accounted for almost all of the additional slowdown recorded in February.

"Having recently announced that inflation is 'likely to be around zero per cent for the time being', the Bank of Japan is unlikely to be panicked into immediate easing on the basis of today's CPI report.

"However, Governor Kuroda has stressed that the central bank will act decisively to get inflation back on track if there are signs that 'underlying price trends' are at risk of deteriorating. Inflation expectations are likely to be a key swing factor."

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