🇯🇵Cable FX Macro Weekly Note: Japan GDP Growth Rate

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The Japanese economic docket holds growth and inflation figures this week. Fourth quarter growth annualized metrics eased to 0.1% from the prior 0.6%, the release came below the survey median for 0.8%. Private consumption increased by 0.3% Q/q vs the estimate of 0.5%, business spending contracted by 0.5%, inventories trimmed 0.5 percentage points from growth while net exports contributed with 0.4 percentage points vs the estimate of +0.3. On inflation, the median survey expects a rebound after the March headline figure eased to 3.2% Y/y from the prior 3.3%, this was in line with estimates. The core metric rose to 3.1% Y/y vs the consensus of 3.0%, however, these readings were not enough to receive a signal for potential adjustments in policy from the BoJ in April.

On growth, economists at ING said they will expect a mild improvement over 1Q, they pencil GDP expanding at a 0.4% annualized rate. ING sees the first quarter driven by the services sector, while exports and manufacturing are set to remain soft. On inflation, the desk at MUFG sees risks that the BoJ will have to upgrade its FY2023 inflation forecast from 1.8% to 2.0% in July. MUFG warned that the BoJ could give up easing bias once it realizes inflation exceeded its expectations and a positive output gap caused the underlying trend to rise into FY24.