Bank of Japan policy update: A question of when, not if
- 11 April 2023 (7 min read)
Key points
-
Inflation has risen considerably in Japan, with CPI reaching a 41-year high of 4.3% in January. Improving wage dynamics indicate price rises may be more sustained compared to previous episodes.
Shunto – Japan’s spring wage negotiations – are pointing towards a 30-year record in terms of wage increases. Improving wages should prompt the Bank of Japan (BoJ) to start removing its accommodative monetary policy.
The Bank’s yield curve control (YCC) was put in place in September 2016 to prevent long-term yields from falling too low, reducing pressure on the financial system. But higher inflation is putting pressure on this policy.
We expect the BoJ – and its new Governor – to cautiously and gradually adjust policy. We expect it to reduce the targeted tenor of its YCC and delay any interest rate hikes to 2024.
Disclaimer
This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested. Past performance is not necessarily indicative of future performance.
Some of the Services and/or products may not be available for offer to retail investors.
This publication has not been reviewed by the Monetary Authority of Singapore.