Our Japan Chart Pack has been updated with the latest data and our analysis of recent developments.
Japan's economy will be hit less hard than many other large economies by the recent escalation of the trade war. While mounting uncertainty will keep the Bank of Japan on the sidelines for a few months, we expect the labour market to remain tight and inflation to remain well above its 2% target. Accordingly, the Bank should continue to tighten policy as the dust from trade tensions settles. Our forecast is that the policy rate will reach 1.5% by 2027.
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