Despite decades of deflation, Japanese consumers are increasingly worried runway inflation could trigger a vicious cycle of capital flight, an excessively weak yen and an interest-rate spike, warns a Credit Suisse report.
“The Bank of Japan’s unprecedented monetary easing could be driving the upsurge in household inflation expectations,” said Credit Suisse Japan economist Hiromichi Shirakawa in a note published on Friday. If that fear spreads to enough consumers, that vicious cycle could be on the cards, he said.
Since April 2013, the Bank of Japan gone for a “shock-and-awe” campaign of monetary-policy easing in a bid to drag the country out of two decades of deflation and achieve its 2 percent inflation target.
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