There are tentative signs that underlying price pressures have strengthened again since the start of the year. However, GDP almost certainly shrank in Q2, and a rapid rebound in the second half of the year is not on the cards. The chances of hitting the 2% inflation target by next summer therefore look increasingly slim, and more monetary easing will be needed before long. The diverging monetary policy outlook between Japan and the US will likely push the yen to fresh lows against the dollar in coming months.
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