Inflation figures in Japan: The dilemma is growing – Commerzbank

Source Fxstreet

Markets had already doubted whether the Bank of Japan (BoJ) would raise its key interest rate again in July. Inflation figures for April published this morning are likely to increase the dilemma for the BoJ. After all, inflation remains above the BoJ's target, mainly due to energy and food prices. However, private consumption is weak, not least due to the negative development of wages. Given the weak sentiment indicators, consumption is likely to continue to stagnate. It is therefore doubtful whether the 'second force' that the BoJ has been waiting for for months eventually will materialize and drive prices up on a sustainable basis, Commerzbank's FX analyst Antje Praefcke notes.

BoJ may not take further interest rate action until the end of the year

"In the first quarter, growth in Japan fell slightly compared with the previous quarter, primarily due to sluggish consumption and negative net exports. There were no signs in Japan of any pull-forward effects from concerns about rising US tariffs, which boosted exports in other countries. In addition to growth and inflation, there is another reason why the BoJ is unlikely to raise its key interest rate in the near future: the general uncertainty on the global markets. Although the US government has suspended the tariffs announced at the beginning of April for 90 days, it is unclear what will happen after that. It is questionable whether viable and lasting agreements can be reached by then."

"At least the US government does not seem to have Japan on its radar as a currency manipulator; obviously, the weak yen is rather seen as a product of contrasting monetary policies. This could also ease pressure on the BoJ to raise interest rates further in the near future. However, the JPY is currently not far from the levels seen at the end of September 2024, before USD/JPY rose again towards 160. Perhaps a little yen weakness would actually suit the BoJ quite well to boost exports."

"All in all, it therefore looks as if the BoJ will not take further interest rate action until the end of the year at the earliest. Until then, the strategy of choice (as for most central banks) is to adopt a wait-and-see stance, but to remain on standby so that monetary policy can be used to respond quickly to changes in current trade developments (with the corresponding potential impact on growth and prices) if necessary."

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Samsung to Manufacture Tesla’s AI6 Chips in $16.5B Deal, Musk ConfirmsTesla CEO Elon Musk announced on Monday that the company has signed a $16.5 billion chip supply deal with Samsung Electronics, a move that could revitalize Samsung’s struggling contract chip manufacturing business. The agreement designates Samsung to produce Tesla’s upcoming AI6 chips, which are expected to power future versions of the automaker’s autonomous driving technology.
Author  Mitrade
7 Month 28 Day Mon
Tesla CEO Elon Musk announced on Monday that the company has signed a $16.5 billion chip supply deal with Samsung Electronics, a move that could revitalize Samsung’s struggling contract chip manufacturing business. The agreement designates Samsung to produce Tesla’s upcoming AI6 chips, which are expected to power future versions of the automaker’s autonomous driving technology.
placeholder
Asian FX Weighed by Dollar Ahead of Fed, BOJ TalksAsian currencies steadied on Tuesday following sharp declines in the prior session, as the U.S. dollar gained support after the announcement of a trade agreement between the United States and the European Union.
Author  Mitrade
7 Month 29 Day Tue
Asian currencies steadied on Tuesday following sharp declines in the prior session, as the U.S. dollar gained support after the announcement of a trade agreement between the United States and the European Union.
placeholder
Asia FX Steady as Dollar Softens Before Fed Rate DecisionMost Asian currencies experienced minimal fluctuations on Wednesday, as the dollar saw a slight retreat from its recent advances.
Author  Mitrade
7 Month 30 Day Wed
Most Asian currencies experienced minimal fluctuations on Wednesday, as the dollar saw a slight retreat from its recent advances.
placeholder
Trump Announces 15% Tariff on South Korean ImportsPresident Donald Trump announced on Wednesday that the United States will impose a 15% tariff on South Korean imports, lowered from the previously threatened 25%
Author  Mitrade
23 hours ago
President Donald Trump announced on Wednesday that the United States will impose a 15% tariff on South Korean imports, lowered from the previously threatened 25%
placeholder
Apple Q4 revenue tops estimates; $1.1B tariff impact forecastApple projected its revenue for the current quarter ending in September well above Wall Street forecasts on Thursday.
Author  Mitrade
2 hours ago
Apple projected its revenue for the current quarter ending in September well above Wall Street forecasts on Thursday.
Related Instrument
goTop
quote