- Economic, price environment is becoming more complex
- Economic developments have changed sharply since Trump’s tariffs in April
- Tariffs could hurt demand via heightened uncertainty, which could weigh on the economy
- Firms could swallow rising costs from tariffs but this will worsen corporate profits
- In turn, that will have negative impact on wages
- Tariffs could affect Japan’s economy via financial, FX market moves also
- Still expect prices to gradually rise and withstand downwards pressure from tariffs
- Corporate profits also stay elevated despite tariffs impact
- Underlying inflation in Japan is rising moderately
- Even as economy slows, Japan likely to maintain mechanism in which wages and prices rise in tandem
This article was written by Justin Low at www.forexlive.com.
