Japan: Main items of interest for 2018 - Nomura

According to Nomura's Economics Team, in the early stages of 2018, the focus will be on BOJ policy, with no changes in the main scenario expected, adding that upside risks associated with spring labor negotiations and growth strategies exist. 

Key Quotes

Decisions about next BOJ governor and deputy governors: in our main scenario Mr Kuroda is reappointed

Normalizing monetary policy: low probability of hike to 10-year yield target

Government declaration that deflation has been overcome: little political benefit in such a declaration

Spring wage negotiations: forecasting base pay hike of around 0.5%; upside risk of 1% hike

Consumption tax hike: expect yet another postponement; focus on relationship with constitutional reform and general elections

Government growth strategies: focus on whether any policies promote greater labor market liquidity

Share prices in more developed markets: any correction likely to prove temporary; watching economy in 2018 H2

Inflation in more developed economies: baseline scenario for stagnant prices; acceleration could affect financial markets

Financial regulation in China: major impact if regulation of wealth management products leads to credit crunch

US midterm elections: under risk scenario pressure could mount for Japan to reduce trade surplus with US

European elections: low probability of Italian elections spurring a new euro crisis