TechFlow News, April 28: Japan has emerged from over two decades of sluggish nominal growth and deflation that have weighed on its economy. Fitch Ratings stated that inflation is now entrenched and increasingly driven by domestic factors—supporting Fitch’s view that the Bank of Japan (BOJ) will continue advancing monetary policy normalization. Since 2022, headline consumer price inflation has averaged 2.9%, exceeding the BOJ’s 2% target. The recent decline in headline inflation primarily reflects government energy-related measures—not a weakening of underlying price pressures. Fitch expects the BOJ to continue raising interest rates, lifting the policy rate by 75 basis points to 1.5% by 2026. Real policy rates remain deeply negative but are trending toward normalization as the BOJ further tightens policy—a development that should exert some upward pressure on the yen. (Jinshi)
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