UBS says not to expect a sudden Bank of Japan rate increase

UBS on the CPI data from Japan yesterday:

  • Japan’s January consumer price inflation data slowed, but the slowdown was less marked in services.
  • This was because of foreign holiday prices—Japanese consumers are following the developed economy trend of prioritizing fun.
  • The drivers of inflation numbers are relatively few, making a sudden rate increase by the Bank of Japan unlikely, but the modest nature of the inflation slowdown keeps alive prospects for a later rate increase.

While I concur with UBS on the inflation data pointing to no near term rate increase from the BOJ I am wary of behind the scenes political pressures on the Bank that force their hand.

This article was written by Eamonn Sheridan at Source