Business

Japan’s economy shrank by 2.1% on an annualised basis in the third quarter, or by 0.5% on the previous quarter, amid weak household consumption and business spending. The contraction suggests that inflation, running at an annual rate of 3%, which is high by Japanese standards, is starting to cut into domestic demand. That complicates the central bank’s path to ending its massive monetary stimulus programme and policy of negative interest rates, which markets expect it to start undoing in the coming months.