Global Sector review – Japan finally tightens monetary policy
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We take a closer look at the Bank of Japan amending their ultra-loose monetary policy, the US job market staying hot, and how another major Chinese property developer announced its default on its debts.
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Published on 1 November 2023
It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.
The Bank of Japan (BOJ) has decided to tighten some restrictions on its ultra-loose monetary policy after Octobers policy committee meeting.
Similar to most developed markets, Japan has a 2% inflation target but headline inflation has been above this target for 17 straight months. Historically, inflation in Japan has always been well below that target and isn’t unfamiliar with deflation.
Post Covid, Japan like many over countries has seen inflation rising, though lower than most developed markets. For example, Japan’s headline inflation rate appeared to peak at 4.3% while in the UK it so far has peaked at 11.1%.
Most central banks have been tightening their monetary policy and raising interest rates to try and slow the economy to lower inflation. Japan on the
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