There are early signs that the surge in “core” goods inflation is running out of steam, but services inflation is strengthening. Services inflation won’t accelerate fast enough to offset the coming slowdown in goods inflation but it should lift the Bank of Japan’s weighted median and mode inflation measures, which would strengthen the case for a withdrawal of ultra-loose monetary policy. While we still expect Yield Curve Control to be abandoned when a new Governor takes over in April, there’s a growing chance that it may happen next week.
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