Moodys: Japan's inflation cools down, but Middle East conflict brings significant risks.

Stefan Angrick of Moody's Analytics stated that consumer inflation in Japan slowed more than expected in February, but this easing is unlikely to continue. Government support was a key factor in this data, cooling energy prices. Inflation in most categories also slowed, indicating that cost-push pressures have eased, but the conflict in the Middle East poses a significant risk. The surge in oil and gas prices may drive up energy prices starting in March, and another depreciation of the yen is another worrying issue. Angrick said that uncertainty will likely keep the Bank of Japan on hold temporarily, as well as wage growth trends. Annual wage negotiations suggest stable growth, but recent experiences show that this may not widespread wage increases. Angrick still expects the Bank of Japan to raise interest rates in June or July, but significant fluctuations in inflation or the yen could lead to an earlier rate hike.