We're sending this Japan Economics Weekly one day earlier than usual because our Singapore office is closed on Friday for National Day.
Financial markets have calmed following the turmoil earlier this year and the yen is barely stronger than it was when the BoJ hiked rates last week. Accordingly, we still expect the Bank to hike its policy rate once more in October. However, the risk is that weaker import inflation forces the Bank to pay more attention to the recent slowdown in services inflation, which poses a threat to the Bank’s view that faster wage growth will sustain at-target inflation.
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