Fitch: Japan's credit conditions will benefit from the pump in prices and the rise in interest rates.

Fitch’s Japanese sovereign analyst stated that despite greater pressure on public finances, Japan’s inflation pump and interest rate rise may drop the debt burden and enhance productivity, thus benefiting the country’s credit situation. Analyst Krisjanis Krustins said, “The rise in interest rates and inflation has a more positive impact than people imagine.” Higher inflation rates help drop the value of outstanding debt and the ratio of debt to GDP. However, this also encourages workers to seek higher wages and prompts businesses to consider long-term efficiency more. Fitch rates Japan at A, five notches below the highest AAA, with a stable outlook. He said that as the debt-to-GDP ratio has improved in recent years, continued decline in the ratio could lead to rating upgrades.