Corporate inflation expectations hit a fresh high with firms projecting inflation to stay above the Bank of Japan’s 2% target five years ahead, the “tankan” showed on Monday.
The outcome underscores the tricky task awaiting incoming Bank of Japan (BOJ) Governor Kazuo Ueda in deciding how soon to phase out his predecessor’s massive stimulus programme.
While steady wage growth and an end to COVID-19 curbs may keep the economy on a solid footing, slowing global growth could derail the export-reliant recovery, analysts say.
“External factors will continue to weigh on business morale in coming months” as the global economy slows under the weight of U.S. and European monetary tightening, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Given the fragile nature of Japan’s recovery, the BOJ is not in a situation where it can normalise monetary policy anytime soon,” he said.
The headline index measuring big manufacturers’…
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