Japanese (final) Q3 data was revised lower as inflation appeared to be negatively impacting spending in the region. Inflation has been above the Bank of Japan’s (BoJ) 2% target for more than a year but officials require more convincing before putting an end to years of stimulus, spearheaded by negative interest rates.
BoJ Governor Kazuo Ueda has often listed the preconditions that inflation needs to be stably and consistently above the 2% target and expected to continue in such a manner going forward. The other condition concerns wage growth, which likewise needs to show persistence. Previously, Ueda was confident the bank will have enough data by year end to make a decision on possibly withdrawing negative interest rates, however, recent comments suggest this may be delayed to Q1 of next year, after wage negotiations have taken place.
