Japan Macro Weekly

Mizuho’s macro team forecasts a gradual path for BOJ rate hikes, projecting a 1.5% terminal rate. Despite volatility in bond yields and energy-related inflation concerns, the economy is expected to continue growing in line with potential.

Key Takeaways

• 1.The Bank of Japan is expected to maintain a gradual rate hike path, with the policy rate projected to reach 1.25% by December 2026 and 1.50% by June 2027.
• 2.Domestic bond yields saw volatility due to fiscal policy concerns and geopolitical tensions in Iran, with 10y JGB yields touching 2.900% before retreating.
• 3.Real wage growth remains positive but faces potential headwinds from inflationary pressures linked to energy prices; consumer spending remains firm.

Table of Contents

• Review of key indicators and events
• Economic indicators
• BOJ-related events
• Economic outlook (as of 13 July)
• Comments on real GDP outlook
• Comments on CPI outlook
• Comments on domestic rates outlook
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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