East Asia Econ

Japan – upside risks to inflation

With the Iran War meaning both uncertainty and a negative terms of trade shock, the BOJ can justify some caution in moving rates. But the bank's detailed analysis last week was heavy on upside risks to inflation. Not addressing that means underlying upwards pressure on $JPY likely persists.

Paul Cavey

May 5, 2026 • 6 min read

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East Asia Today

Some charts from today's longer piece looking at the BOJ's analysis of inflation in its outlook report last week. Obviously, the BOJ's big focus was the impact of Iran, so also today some charts looking at the direct feedthrough from oil prices into pump prices and CPI across the region.

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East Asia Today

The main releases today were Korea and Taiwan PMIs. In terms of prices, the surveys show clear inflation pressure. For growth, the message is more mixed; firmer PMIs in part reflect supply disruptions. But exports still look strong, and in Taiwan, the non-mfg PMI has risen too.

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Last week, next week

As usual, a recap of research over the last week but today, no refresh of market themes. I am now away for a few days, so updates will re-commence when I am back on May 4th.