Japanese rates on hold until August, but risks still on the upside

The weakness of the latest CPI and activity data, combined with cautious growth and inflation forecasts from the Bank of Japan, has prompted us to tweak our rate forecasts down slightly. We now expect the Bank to wait until August before hiking rates again. However, this would still be earlier than generally anticipated, and we continue to expect the pace of tightening to pick up sharply in 2008.

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