NZD/USD: Overlooked RBNZ inflation survey may jolt sleepy markets

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Japan's economy has recovered moderately, although some weakness has been seen in part. It is likely to keep growing at a pace above its potential growth rate, as a virtuous cycle from income to spending gradually intensifies. The current situation of Japan's economy is that, while growth in private consumption has remained somewhat weak, production, employment, and income, for example, have seen moderate growth. The expanding trend in private consumption is likely to become more evident, since the uptrend in real wages is expected to take hold. It is necessary to continue to closely monitor whether the channels are functioning smoothly, both on the demand side, through which wage increases lead to an expansion in consumption, and the supply side, through which they are passed on to consumer prices.  When assessing developments in private consumption and economic activity, it is appropriate to use standards that are different from those applied before the COVID-19 pandemic and that do not put too much emphasis on macro data. This is due to, for example, the limit on how much information can be captured on e-commerce, the impact of changes in consumer behavior since the pandemic, and to firms enhancing post: BOJ CAUTIONS AGAINST POTENTIAL DISRUPTIONS TO POLICY NORMALISATION PATH DUE TO RATE HIKE, WARNS OF HEIGHTENED FX MARKET VOLATILITY DUE TO DIVERGING US-JAPAN MONETARY POLICY PATHS

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