Will the BoJ again follow the Fed and the ECB?

There is less evidence of spare capacity in Japan’s economy than in the euro-zone which might suggest that the Bank of Japan is likely to hike rates before the ECB. However, the Bank has pledged to let inflation overshoot its 2% target which is unlikely to happen any time soon. With fiscal and external headwinds looming, our view remains that the Bank will not tighten policy for the foreseeable future.