Japan's pioneer of big data predicts change in BOJ's approach on prices

TOKYO, July 13 (Reuters): The coronavirus pandemic will force the Bank of Japan (BOJ) to embrace big data as its conventional consumer price index fails to offer an accurate, real-time picture on inflation, said Tsutomu Watanabe, a leading academic on alternative data in Japan.
The BOJ pledges to achieve 2.0 per cent inflation as measured by the government's consumer price index (CPI), which means its policy decisions are closely linked to fluctuations in the index. That approach will need to change as government data are released too late to give policymakers clues on how the pandemic is affecting the economy in real-time, Watanabe told Reuters.
"The BOJ would be behind the curve on policy if it relies too heavily on data that comes out late" such as CPI, said Watanabe, a former BOJ official who is professor at the University of Tokyo's Graduate School of Economics.