Japan may have finally left deflation behind says Jesper Koll
- Adam German
- 2 days ago
- 2 min read
For decades, Japan was seen as a lost economy, defined by deflation, weak demand and near-zero interest rates.
Jesper Koll, one of Japan’s best-known market strategists, argues that story may finally be changing.
In this episode of Macro Sessions, Maggie Lake speaks with Koll about rising wages, stronger consumer demand, renewed corporate investment and growing pricing power across Japan’s economy.
The first half of the conversation explains why Japan’s shift away from deflation could become one of the most important macro stories in global markets.
The second half, available through Maggie Lake’s Substack, continues with the yen carry trade, Koll’s preferred opportunities and the risks investors should be watching.
Topics Covered:
Jesper Koll argues that Japan’s biggest macro misconception is inflation, saying the headline data understates what households and businesses are actually experiencing.
He explains why Japan’s inflation story has shifted from imported cost pressure to something more structural: rising wages, stronger demand and real pricing power across small and medium-sized businesses.
The conversation highlights a major generational change in Japan, with young workers seeing salary growth after decades of stagnation and job-switchers receiving large pay increases.
Koll connects Japan’s improving consumer confidence to a positive wealth effect, supported by rising stock prices and real estate prices that have moved above their pre-bubble peak.
He describes a Japan where banks are lending again, companies are investing domestically and business confidence is spreading across sectors rather than being concentrated in one narrow theme.
The discussion explains why Japan’s economy is now facing resource constraints, from labor shortages to long waits for contractors, and why this reinforces the inflation pressure building inside the country.
Koll makes the case that the Bank of Japan is behind the curve and that markets may be underestimating how high Japan’s neutral interest rate could eventually move.
He outlines why the BOJ has remained cautious, especially because of concerns about regional banks, credit cooperatives and the stability of the broader financial system.
The interview also explores why regional bank consolidation, and private equity involvement could give the BOJ more room to raise rates faster.
Koll’s central takeaway is that Japan is undergoing a structural break from decades of deflation, zero interest rates and weak demand toward wage growth, domestic investment, inflation and monetary normalization.
