Yes. Not only producer prices are up, domestic demand continues to increase, which will further increase consumer prices. In today’s producer price report the disaggregate figures for demand levels show, that final and consumer goods prices are growing strongly. This comes on top of strong capital spending and export demand, so the Japanese economy seems to have entered a very healthy cycle. The BOJ might therefore upgrade its forecast for real growth this fiscal year beyond the current to 2.2%. It will stop short of ending its quantitative easing policy at the next meeting, however.

As early as April. The business cycle looks rather strong, so long-term expectations and long-term interest rates are the key for BOJ policy. Few people are talking now about Japan's 160% public debt, but to keep this mountain of debt manageable, the BOJ needs to keep interest rate expectations at the long end low - and the government on its toes to continue spending cutes. Though tighter monetary policy might increase rates at first, it would help to keep long-term expectations and interest rates from increasing too fast. So the BOJ will probably want to end QEP a bit earlier than absolutely necessary, but continue with ZIRP.