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2% inflation wouldn’t be enough for rate hike

While the war in Ukraine will lift Japanese inflation to the Bank of Japan’s 2% target, continued weakness in wage pressures and underlying inflation mean that the Bank won’t respond with a rate hike. And while Governor Kuroda’s successor may be more hawkish, we don’t foresee tightening next year either.
Tom Learmouth Japan Economist
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BoJ may get less dovish, GDP to fall in Q1

PM Kishida’s two new Bank of Japan policy board nominations could push the Bank in a slightly less dovish direction, but it won’t make much difference to policy decisions over the next year. A more meaningful shift may come early next year if the Prime Minister opts to install a more hawkish BOJ leadership when Governor Kuroda and his deputy governors Amamiya and Wakatabe step down. But we expect inflation to fall well below target next year, so a policy rate hike probably won’t be on the table by then.  

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