The Bank of Japan’s favourite gauge of underlying price pressures remains just a touch above zero. However, spare capacity is narrowing and growth in part-time pay has started to pick up. What’s more, the exchange rate has weakened sharply since the US elections. The upshot is that we now expect the Bank to leave policy settings unchanged for the foreseeable future. But we also expect the Federal Reserve to tighten policy by more than the markets are currently expecting, so the depreciation of the yen has further to run.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services