Profits will hold up better than the Bank of Japan expects

While the Bank of Japan is worried that trade tensions will weigh on profits, business investment and wage growth, profits have in fact held up well so far and we expect that to remain the case going forward. And with uncertainty about the US tariff landscape diminishing, we expect business investment and wage growth to remain solid. Accordingly, we still expect the Bank to hike its policy rate more sharply over the next couple of years than most anticipate.