JPY: don’t expect Japan rates to rise anytime soon
While inflation in Japan remains above the Bank of Japan's 2% target for the 15th straight month in June, headline CPI was down from 3.5 to 3.3% in June.
Core CPI, which excludes fresh food costs, rose 3.3% in June from a year earlier, accelerating from a 3.2% gain in May. But don't expect the Bank of Japan to start raising rates any time in the near future. It's becoming clear to some economists that with services price growth also slowing last month, policymakers will feel that wage pressures have yet to build up enough to warrant an imminent tweak to the ultra-loose monetary stance.
(Video Transcript)
Consumer price index
Now in Japan, the inflation picture remains above the Bank of Japan's 2% target for the 15th straight month in the month of June. Let's take a look at the figures. The headline consumer price index (CPI) rose 3.3% in June, year on year. After rising by three and a half percent the previous month, core CPI, which excludes fresh food costs, rose 3.3% in June from this time last year, accelerating from a 3.2% rise in May.
But economists say don't expect the Bank of Japan to start raising interest rates any time in the near future. Excluding both fresh food and fuel costs, the index rose 4.2% in June from this time last year. Now that's down from 4.3% in May.
Japanese yen
This version of the index favoured by the Bank of Japan has slowed for the first time since January 2022. And I'm mindful of what's happening with the JPY; as you can see if you look at this chart here, the yen is falling again today. This is the USD rising against the weaker
It's becoming clear to some economists that with service price growth also slowing last month, policymakers will feel that wage pressures have yet to build up enough to warrant an imminent tweak to the ultra-loose monetary stance.
Bank of Japan
So, the Bank of Japan is not expected to move anytime soon. I think the underlying information and data coming through from today's CPI numbers would seem to underline that stance for the Bank of Japan to keep interest rates ultra-low.
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