Consumer spending probably isn't quite as weak as the retail sales would suggest and we still expect GDP to rebound this quarter. However, the continued weakness in new job openings suggests that the renewed tightening of the labour market in October won't be sustained. That could prompt the Bank of Japan to refrain from ending negative interest rates. But with wage growth increasingly driven by efforts to prevent real wages from falling rather than by the health of the labour market, we still think that the Bank will use the current window of opportunity to end ultra-loose policy settings.
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