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
Solana (SOL) at Crossroads — Bounce Likely If $142 Remains IntactSOL price is now recovering and might aim for a fresh increase above the $150 zone.
Author  NewsBTC
11 hours ago
SOL price is now recovering and might aim for a fresh increase above the $150 zone.
placeholder
Litecoin Miners On Accumulation Spree—Is Something Brewing?On-chain data shows Litecoin miners have seen their reserves shoot up over the past year, a sign that the large pools have been accumulating.
Author  Bitcoinist
11 hours ago
On-chain data shows Litecoin miners have seen their reserves shoot up over the past year, a sign that the large pools have been accumulating.
placeholder
Interest Rate Cut Forecast: Bessent Bets on Pre-September, Goldman Sachs Sees September Cut, Nonfarm Data Holds the KeyJuly 1, U.S. Treasury Secretary Scott Bessent projected that the Federal Reserve would initiate a rate cut before September, emphasizing that President Trump’s tariff policies are unlikely to spur inflation as the Fed had anticipated.
Author  TradingKey
11 hours ago
July 1, U.S. Treasury Secretary Scott Bessent projected that the Federal Reserve would initiate a rate cut before September, emphasizing that President Trump’s tariff policies are unlikely to spur inflation as the Fed had anticipated.
placeholder
Dogecoin Closes June In The Red With 14% Losses, Will July Be Any Better?With the close of June, the Dogecoin price has once again confirmed the bearish trend of the month.
Author  Bitcoinist
11 hours ago
With the close of June, the Dogecoin price has once again confirmed the bearish trend of the month.
placeholder
EUR/USD pulls back from highs as investors await further US employment dataThe EUR/USD pair posts moderate losses on Wednesday, trading near 1.1780 at the time of writing.
Author  FXStreet
12 hours ago
The EUR/USD pair posts moderate losses on Wednesday, trading near 1.1780 at the time of writing.
Related Instrument
goTop
quote