Bank unlikely to ease more in response to virus wave

The Bank of Japan is unlikely to respond to the worsening virus outbreak with additional stimulus. However, policymakers may provide some hints at the upcoming meeting about what to expect from the policy review due in March.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Weekly

Restrictions may not last long, key Shunto approaching

With restrictions this week expanded to cover most of Japan’s economy, and surging infections already starting to cause staff shortages in some industries, GDP is only likely to tread water this quarter. But based on experience elsewhere, the Omicron surge may only last another couple of weeks before staff shortages ease and countermeasures start to be lifted again. Meanwhile, reports suggesting that Toyota’s labour union – sometimes seen as a bellwether in wage talks – will seek a sharp rise in bonus payments at this year’s Shunto could be an early sign that wage growth will pick up this year in line with PM Kishida’s wishes.

21 January 2022

Japan Data Response

Japan Consumer Prices (Dec. 2021)

Consumer price inflation reached a two-year high of 0.8% in December, but with energy prices set to fall back, we think that it will peak around 1% by mid-year.

21 January 2022

Japan Data Response

Japan External Trade (Dec. 2021)

Exports were broadly stable in December after a sharp rebound in November. We think they’ll continue to recover at a decent pace this year as external demand for capital goods continues to rise and motor vehicle exports resume their recovery once Omicron waves subside.

20 January 2022

More from Marcel Thieliant

Japan Economic Outlook

Faster vaccine campaign allows rapid rebound

Japan’s lagging vaccine rollout has finally reached cruising speed, which should allow a rapid recovery in activity over the second half of the year. The labour market may soon be as tight as it was before the pandemic, but we expect this year’s jump in inflation to be short-lived. As such, the Bank of Japan will keep policy loose for the foreseeable future.

7 July 2021

Australia & New Zealand Economics Update

RBA to hike rates in early-2023

By tapering its bond purchases and watering down its commitment to keep its policy rate unchanged until 2024, the RBA is paving the way for interest rate hikes in 2023.

6 July 2021

Japan Economics Weekly

Manufacturing bottlenecks may be easing

The economic recovery stalled last quarter as the services sector was held back by virus restrictions and manufacturers suffered from chip shortages. However, with daily jabs now above the government's 1mn target and chip supply ramping up, activity is set for a strong rebound in the second half of the year.

2 July 2021
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