📝Japanese Financial Conditions Are Far From Tight: ING

Various BoJ speeches have discussed the concept of a neutral

rate, which most see in the 1.1-2.5% range in nominal terms.

The diagram below has appeared in a few BoJ presentations recently and serves as a reminder that monetary conditions are too loose now that inflation is seen sustainably above 2.00% into FY2028. Among many of the positive charts in these presentations, one that stood out was the 10% year-on-year loan growth from ‘Major Banks’ – matching the peak from early 2020. Clearly, financial conditions are far from tight. - ING