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Coronavirus will force Bank of Japan to cut rates

Two developments over the past couple of days have caused us to change our thinking on the outlook for monetary policy in Japan. We now assume that the coronavirus will spread widely across most of the world’s economies including Japan and that this will encourage households to self-isolate, weighing on consumption. It also now appears likely that both the Fed and ECB will respond with rate cuts. If so, the Bank of Japan is likely to join them.

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