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Japan Monetary Policy Tweak Unlikely to Raise Credit Risks Sharply
Small adjustments to Japan’s monetary policy regime, such as the more flexible approach to yield curve control (YCC) announced on 28 July 2023, carry only modest risks for the sovereign and will be generally net positive for the Japanese megabanks, says Fitch Ratings. We still believe consumer price inflation will remain below the Bank of Japan's (BOJ) target of 2% over the medium term, and that substantial monetary tightening is therefore unlikely. Fitch expects the BOJ to remain tolerant of inflation temporarily above its target, though we had anticipated that the YCC policy would be adjusted relatively soon, ... (full story)