Japan’s core inflation again burns BOJ
2023-09-22
Summary:
Japan's core inflation rate rose 3.1% in August from a year earlier, matching the previous month. The index has stayed above 2% for the 17th straight month.
Japan's core inflation rate rose 3.1% in August from a year earlier, matching the previous month. The index has stayed above 2% for the 17th straight month.
Real wages have declined for 16 consecutive months in July despite biggest pay hikes in 30 years. That is eroding households’ spending power.
The BOJ downgraded its inflation median forecast for 2024 to 1.9% from 2% previously, and retained its 2025 forecast for 1.6% at its meeting in July.
The central bank will end its negative interest rate policy and abolish YCC next year, the majority of economists said in a Reuters poll. The median forecast for Japan's fiscal 2023 core consumer inflation rate was unchanged at 2.8%, while the fiscal 2024 rate was revised up to 2.0%.
The yen languished around its more than 10-month low against the US dollar due to the Fed’s hawkish pause. The BOJ is expected to stand pat on its ultra-easy monetary settings later today.
Traders are on guard for potential forex intervention as the yen approaches the 150 level, but Japanese officials have sit comfortably with mere verbal warnings so far.
The yen remains on the defensive after a rally from the 148.45 region that it hit earlier. A break below EMA 50 might lead to a fresh descent.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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