Our Japan Chart Pack has been updated with the latest data and our analysis of recent developments.
With the economy growing at an above-trend pace, the labour market should soon start to tighten again. There are mounting signs that a virtuous cycle between wages and prices is starting to form and we only expect inflation to fall below the Bank of Japan’s 2% target by the end of 2024. While we expect inflation to settle at 1% in the long-run, we think that BoJ Governor Ueda will use the current window of opportunity to dismantle the ultra-loose policy launched by previous Governor Kuroda. We expect the Bank to end negative interest rates by early 2024, followed by a full dismantling of Yield Curve Control by mid-year.
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