Forecast: BEARISH

Inflation in Japan is currently at 0.8%. The Bank of Japan is struggling to meet its 2% target and are now injecting 80 trillion YEN a year into the economy in an attempt to push inflation up to their 2% target.

The Bank of Japan forecasts that inflation will reach 2% by 2019. Although many investment banks have suggested they scrap this target as massive injections into the economy has failed to push up inflation.

It is worth noting that JPY is considered a safe haven currency which increases in value when markets are facing uncertainty. However, these gains do not last long unless something significant happens such as a financial crisis.

The Bank of Japan will be in favour of allowing their currency to remain weak as this boosts sales. This increases the amount of money being injected into the economy, which therefore helps inflation reach the bank’s 2% target.

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