Inflation is positive for Japan and BoJ wants it to sustain Japan's economy has been stuck in a negative feedback loop of low growth, low inflation and interest rates since the asset bubble burst in the late 1980s. An environment of little to no inflation reduced the desire to raise wages, to invest and to spend. But the return of inflation can mean corporate investments in productivity, in growth and a consumer desire to spend. As the purchasing power of cash erodes, investors could reallocate into Japanese equities and with higher rates, Japanese bonds may start to look attractive relative to foreign bonds, according to Izumi Devalier. Machinery analyst Kenjin Hotta highlights the particularly attractive Japanese factory automation sector. One that benefits from global supply chain shifts, investment in EVs and where growth can be another positive for the Japanese economy.   You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.   "Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ©2023 Bank of America Corporation. All rights reserved.