East Asia Econ

East Asia Today

Today's data releases show fx reserves in China rising, providing further evidence of the resumption of capital inflows. In Japan, the BOJ's preferred measure of consumption weakened in August. In September, the monetary base also fell, but exports look to have stabilised.

Paul Cavey

Oct 7, 2025 • 2 min read

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Japan – hemmed in

With JPY depreciation unpopular and the cycle intact, it is unlikely that the Takaichi administration can really make the BOJ hike even more slowly than it has been. The policy that would work better for defusing the cost of living crisis would be fiscal loosening to raise household incomes.

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Japan – wage growth a bit better

One of the data points that challenges the BOJ's confidence on wage-price developments is slowing part-time wage growth. That ticked up in August, as did base pay for full-time workers. By historical standards, both are high, but growth in overall earnings growth continues to trail price inflation.

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East Asia Today

Today's main event was Japan's markets pricing in Takaichi's victory, likened to an Abenomics 2.0 of fiscal and monetary loosening. But in Abenomics 1.0, fiscal policy wasn't loosened. And today's BOJ regional report, showing the cycle intact, doesn't allow much room for monetary loosening.