The Bank of Japan to resume its tightening cycle in October- Capital Economics
Investing.com -- The recent trade agreement between the United States and Japan has eliminated a key downside risk, potentially leading the Bank of Japan to present a more positive assessment of economic prospects at its upcoming meeting next week.
With inflation continuing to exceed the Bank’s pessimistic forecasts, analysts expect the central bank to resume its tightening cycle with another interest rate hike in October.
The Bank of Japan had adopted a more negative stance on GDP growth and inflation outlooks during its May meeting in response to growing trade tensions, maintaining this cautious position at its June meeting.
The trade deal finalized between the US and Japan this week has reduced some of these downside risks. According to press reports, the Bank had already begun showing increased optimism about economic conditions even before the latest developments regarding US tariffs.
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