BoJ sending further signals that negative rates will end

Data released this week showed that inflation fell sharply in Tokyo while wage growth remains well below the levels the BoJ considers necessary for meeting its 2% inflation target on a sustained basis. However, services inflation has continued to accelerate and an alternative wage gauge the BoJ tends to focus on shows the strongest wage growth in at least two decades. With both Deputy Governor Himino and Governor Ueda this week outlining a future without negative interest rates, we’re sticking to our view that the Bank will lift rates into positive territory next month already.