Japan – more inflation risks from the BOJ

The analytical boxes from the BOJ's full outlook report have three conclusions: AI won't help macro as much as headline figures suggest; but both AI and oil mean continued upside risks for inflation; and the household sector should be able to cope with rate hikes.

Paul Cavey

Aug 3, 2026 • 5 min read

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East Asia Today

China's RatingDog mfg PMI dipped in July, and isn't far above 50, though that's still higher than the official version. PMIs elsewhere remain better. The main driver is exports, which in Korea rose again in July. But Taiwan's non-mfg PMI is also strong, at a headline level, and for output prices.

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Last week, next week

Current themes: export and tech strength preventing broad policy easing in China; policy messiness in Japan isn't yet over, though it is important that pricing of the BOJ has started to move; growth in Korea and Taiwan is strong, and also spreading from export sectors to domestic demand.

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East Asia Today

Lots today. Bad PMIs in China, BOJ meeting, and all the usual month-end data releases in Japan and Korea. In Japan, the data were mixed, but in Korea, generally strong, as was Q2 GDP in Taiwan. Finally, the new data packs I've been working on.