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Economics: Japan
Economics – Markets – Strategy
Chart 9: Outlook for prices, 1yr from date of survey
Sep-07
Survey
Dec-07
Mar-08
0% 20% 40% 60% 80% 100%
Will go up significantly
Will go up slightly
Will remain almost unchanged
Will go down slightly
Will go down significantly
Source: BOJ 33rd Opinion Survey on the General Public's Views and Behaviour
Chart 10: Outlook for prices, 5yrs from date of survey
Sep-07
Survey
Dec-07
Mar-08
0% 20% 40% 60% 80% 100%
Will go up significantly
Will go up slightly
Will remain almost unchanged
Will go down slightly
Will go down significantly
Source: BOJ 33rd Opinion Survey on the General Public's Views and Behaviour
The BOJ will lift
rates the first
chance it gets,
maybe as early as
1Q09
The rise in inflationary expectations, if persistent in the coming quarters, will
raise the odds of the central bank lifting interest rates at the earliest possible
opportunity. This could come as soon as economic data improves, possibly as
early as 1Q09. Although we have ‘downgraded’ the annual average YoY growth
rate for 2009 to 1.6%, in QoQ terms growth should actually average a relatively
stronger 0.7%. To that end, we continue to look for interest rate normalisation
to resume in 1Q09, with a modest 25bp hike in the overnight call rate target to
0.75%. This will be followed by a further 25bp hike in 2H09, taking the call rate
target to 1.0%.
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