Capital Economics Says Japan's Economy Picking Up

The transcript discusses global economic trends, focusing on Japan's inflation challenges and the impact of monetary policy. It highlights the weak inflation in Japan, particularly in the service sector, and the lack of significant results from the Bank of Japan's policies. The discussion also covers the dynamics of price changes and the tight labor market, suggesting potential wage pressures and a possible rebound in inflation, though the 2% target remains distant.

What is the current state of inflation in Japan according to the transcript?

• Inflation remains weak despite economic growth.

• Inflation is decreasing due to strong monetary policy.

• Inflation is stable and on target.

• Inflation is rapidly increasing.

What is a significant concern regarding service inflation in Japan?

• Service inflation has turned positive for the first time.

• Service inflation has turned negative, indicating policy ineffectiveness.

• Service inflation is stable and not a concern.

• Service inflation is increasing due to high demand.

Why did firms initially raise prices during the early stages of quantitative easing?

• Due to a decrease in sales tax.

• To match international price levels.

• Because of a sales tax hike.

• To increase profit margins.

What is one reason for the current slowing of service inflation?

• There is a significant decrease in wage pressures.

• Firms are seeing a major reason to change prices.

• The labor market is very loose.

• Firms do not see a major reason to change prices.

What potential future trend is suggested regarding inflation in Japan?

• Inflation will stabilize at current levels.

• There might be a rebound in inflation due to wage pressures.

• Inflation will continue to decrease indefinitely.

• Inflation will reach the 2% target soon.