©Reuters. Japan, it is the yen rather than inflation that drives central bank policy
AlllianceBernstein explains how the US dollar drives Japanese monetary policy in analysis by Yusuke Hashimoto and Brad Gibson, who see opportunities for investors to seize
The mandate of Bank of Japan is to maintain price stability with a target of a 2% inflation rate, but consumer price fluctuations in Japan are the norm. The answer to the apparent contradiction lies in the exchange rate, which will likely influence future moves by the central bank. AlllianceBernstein explains how the yen drives Japanese monetary policy in an analysis by Yusuke Hashimoto | Portfolio Manager—Japan Fixed Income, and Brad Gibson| Head—Asia Pacific Fixed Income, who recalled that in April the Central Bank refrained from changing the policy of negative rates and yield curve control in the face of inflation at 3.2% with a core rate, which excludes food and energy, at 3.8%.
TEMPORARY RISE IN INFLATION
Quoting the weakness of real wages, believed that the rise in inflation was temporary, and was probably right, because for much of the last 25 years Japan has been running well below target consumer prices, despite the efforts of the Central Bank, so the latest data relatively high may be short-lived. AllianceBernstein experts note that in past inflation cycles the US has led the way, and having already peaked in this cycle, European and Japanese inflation is also expected to start declining soon…
** This article was written by FinanciaLounge