What’s Up with Inflation Expectations in Japan?

Christensen, Jens H. E.; Spiegel, Mark M.

Journal Article

What’s Up with Inflation Expectations in Japan?

Abstract: Both actual inflation and inflation expectations increased recently in Japan after decades of being undesirably low. An estimate based on nominal and real Japanese bond yields adjusted for liquidity and other risk premiums confirms that investors’ long-term inflation expectations have also increased. However, projections indicate that further increases are less likely and that long-term expected inflation in Japan is likely to remain anchored below the Bank of Japan’s 2% inflation target.

Keywords: inflation expectations; inflation; Japan; inflation targets;