Japan's core inflation has slowed, and the Central Bank's withdrawal from easing may be delayed

Japan’s core inflation slowed sharply in November to its lowest level in more than a year, highlighting the easing of cost-push inflationary pressures, which could give the Central Bank more time before phasing out massive easing. While services prices continue to rise, some analysts doubt that the rate of rise will be enough to generate more demand-driven inflation, which is seen as a prerequisite for the Central Bank to exit its ultra-loose policy. Jeemin Bang, associate economist at Moody’s Analytics, said the base expectation is that the Central Bank will exit the negative Intrerest Rate policy in 2024, but the Central Bank is expected to maintain some level of support given the weak state of the economy. Takeshi Minami, chief economist at the Norinchukin Research Institute, said the Central Bank may not begin policy normalization for the time being.