Japan Resilient Consumers Will Support Further Tightening

Japan's economy is demonstrating resilience in Q2, with firm inflation data supporting ANZ's forecast of a 25bp interest rate hike by the Bank of Japan in Q4 2026. The central bank continues to favor a gradual approach to tightening amidst modest GDP growth expectations.

Key Takeaways

• 1.Japanese household consumption shows Q2 strength, driven by wage settlements and subsidies.
• 2.Bank of Japan (BoJ) raised rates in June and is forecasted to hike another 25bp in Q4 2026.
• 3.Inflation remains above the 2.0% target for core measures, supporting the case for further monetary tightening.

Table of Contents

• Japan: resilient consumers will support further tightening
• Conclusion

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