Outlook on Japan

Summary
- The Bank of Japan exited negative interest rate policy at its March meeting, a historic move symbolizing the end of deflation in Japan.
- Following stronger-than-expected wage gains at spring labor negotiations, this was a first step in policy normalization; we expect one or two more rate hikes by year end.
- As Japan leaves deflation behind, we have started to see changes in corporate and household behavior that demonstrate greater willingness to invest and take risk.
- We remain very positive on Japanese equities over the medium and long term thanks to corporate governance improvement and the shift from deflation to inflation.