Japan Economy Minister Kiuchi: Pass-through of rising costs has been limited so far
Japan Economy Minister Minoru Kiuchi said during the European trading session on Tuesday that the overall impact of the increase in the cost of goods has not yet been passed. Kiuchi added that bothe the government and the Bank of Japan (BoJ) are closely working to achieve sustainable 2% inflation target.
Remarks
June overall CPI shows price rises remain moderate year-on-year.
Must be vigilant to likelihood pass-through of costs on food could proceed from summer through autumn.
Govt shares with BoJ forecast that consumer inflation will accelerate in latter half of this year, slow thereafter
Hope BoJ conducts monetary policy appropriately to stably, sustainably achieve its 2% inflation target.
Hope BoJ closely communicates with govt in guiding policy.
Won't comment on specific FX level but watching closely impact of FX moves on economy, prices.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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