Japan inflation improves slightly

Swissquote Bank Research Team Swissquote Bank Ltd

After the Bank of Japan cut its 2019 outlook for core inflation, the rate has improved, with the core gauge at 0.80% (prior: 0.70%) in January. Yet private consumption in the country declined in January, while a February manufacturing PMI of 48.50 pointed to recession for the first time in 30 months. It seems that Japanese inflation is struggling to take off, although a time lag of several months might partially explain it. Headwinds are on the way, starting with a consumption tax hike from 8% to 10% planned for October 2019. The BoJ is not expected to change its current monetary easing course at its 15 March meeting. The inflation target of 2% remains distant, unreachable before 2021.

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Swissquote Bank Research Team

Swissquote Bank Ltd

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