BoJ will reduce pressure on Yield Curve Control
My subscription
...
Filters
My Subscription All Publications

BoJ will reduce pressure on Yield Curve Control

Supply shortages and continued virus caution will result in a weaker recovery in Japan than most anticipate. With wage growth sluggish too, the Bank of Japan won’t see a need to lift its policy rates. However, we expect the Bank to widen the tolerance band around its 10-year yield target as its swelling holdings risk stifling the functioning of the bond market.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
Continue reading

More from Japan

Japan Data Response

Japan External Trade (Jul. 2022)

Japan’s trade deficit widened to a record high in July but it should start to shrink over the coming months as supply shortages and commodity prices continue to ease. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

17 August 2022

Japan Data Response

Japan GDP (Q2 2022 Preliminary)

Japan’s economy grew in Q2 driven mainly by private consumption, though the overall figure disappointed mainly due to fluctuations in stockbuilding that won’t last. The recovery should persist through Q3 and Q4, though the pace will slacken a bit, as strong investment momentum is offset by a more subdued consumption outlook. We expect GDP to return to its pre-virus trend before long.

15 August 2022

Japan Economics Weekly

Demographic woes persist, tourists waiting at the gate

An exodus of long-term migrants contributed to the 0.6% fall in Japan’s population last year but with border controls loosened since March net migration is bouncing back strongly. Even so, we still see GDP growth settling around 0.5% over the longer-term as a shrinking workforce offsets productivity gains. Meanwhile, Japan remains a highly popular tourist destination and once the onerous procedural requirements for entry are lifted, probably sometime in Q4, tourist arrivals and spending should rebound strongly.

12 August 2022

More from Marcel Thieliant

Australia & New Zealand Data Response

New Zealand Consumer Prices (Q2 2022)

The stronger-than-expected rise in consumer prices in Q2 adds some upside risks to our forecast that the Reserve Bank of New Zealand will lift rates to 3.5%, but we still think that weaker economic activity will force the Bank to stop tightening before long.

18 July 2022

Japan Economics Weekly

Prospect of smaller budget deficits adds to BoJ’s woes

With tax revenues soaring and pandemic-related expenditure set to be phased out, the budget deficit will shrink sharply over coming years. However, the resulting decline in bond issuance will make it more difficult for the Bank to defend its 10-year yield target without further undermining the functioning of the bond market.

15 July 2022

Australia & New Zealand Economics Weekly

RBA will deliver 75bp rate hike next month

With consumer spending resilient, the labour market tightening far faster than anyone had anticipated and inflation set to surge further in Q2, we now expect the Reserve Bank of Australia to deliver a 75bp rate hike at the upcoming meeting in August. Meanwhile, the Reserve Bank of New Zealand will probably hike by another 50bp next month, but we expect the economic recovery in New Zealand to lose steam before long.

15 July 2022
↑ Back to top