top of page
  • Writer's pictureEdward Ballsdon

Japan – The window is only ajar for the BoJ


There is a lot of market discussion about when the BoJ, the last Central Bank to maintain negative rates, will tighten policy. This short note demonstrates that there are some serious disinflationary base effects coming up and how the BoJ is boxed in with respect to policy changes.

Comparing the Japanese inflation basket with that of other countries highlights a very unique difference, which stems from the Yen’s steadfast depreciation over the last 3 years.

The BoJ is in a tough and unique spot – if it tightens, the negative disinflationary base effects will be stronger, thus heightening disinflation (of both CPI and API), if it does not, then the currency will continue being debased.

Recent Japanese history and financial history more broadly suggests which course the BoJ is likely to be followed, which is continued low rates, QE and currency debasement.

Recent Posts

See All

UK "Poisoned Chalice"

Following last week’s piece showing how global macro trends are leading to big political changes (Boiling Frog), this note looks at the UK macro environment. The newly elected Labour Party, which achi

The Boiling Frog

An overview of the key long term themes that are driving macro views. Highlights of the global private and public leverage trends of the last 40 years and the important changes that have occurred in t


bottom of page