BoJ Outlook Report: weak JPY pushes up prices for a wide range of good services, thereby giving a bigger boost to core consumer inflation; impact of a weak JPY shock is bigger than that of oil shock
Importance
Level 1
- "...while a yen depreciation shock tends to lead to a rise in the GDP deflator through wage increases and greater profit margins, an increased crude oil price shock tends to cause a decline in the GDP deflator through compressed profit margins and wages, reflecting worsened trading gains...In the current phase, it is possible that both shocks could occur at the same time..."