The Bank of Japan kept its policy rate at 0.5% at Thursday’s meeting. Considering the significant downgrading of growth and inflation forecasts in its Quarterly Outlook Report, the central bank will likely take a long pause to assess the impact of high global trade policy uncertainty on growth and inflation.
Despite weaker-than-expected gains in headline consumer and producer prices in February, the source data that feed into the PCE deflator show few signs of a slowdown, something that won’t sit well with the Federal Reserve as the boost from tariffs is still to come.
Start-of-the-year residual seasonality occurs because supplier and labor contracts are usually
renegotiated in January, leading to an upward bias in wage and price statistics.
The spotlight focused on this week’s consumer price report to see if it raises more questions about the Fed’s decision to cut rates so aggressively at its mid-September meeting.
Our nowcast of the US PCE deflators imply inflation is not falling as smoothly as we had anticipated. But it still suggests inflation is on a path, albeit bumpy, back to 2%.
The Bank of Japan maintained its policy rate at 0.25% during Friday’s meeting. Although we still expect an additional rate hike this year, we now expect that it will take place in December rather than October, given the updated political calendar and the recent yen strength.
At Wednesday’s policy meeting, the Bank of Japan (BoJ) raised the policy rate to 0.25% without clear evidence of wage-driven inflation in wage and consumption data. Although CPI has stayed above 2%, the core-core CPI (excluding energy and fresh foods) has been easing.
Each month, we forecast the dozens of price categories that underlie the consumer price index, and our forecast is for the headline and core CPI to rise by 0.1% and 0.2% in June, respectively. This would be another benign inflation print from the Federal Reserve’s perspective and reinforces our baseline forecast for a September rate cut.
Related Reports Modelling physical climate risk: Assessing UK flood risk and economic impacts In this blog, we examine the economic consequences of a 1-in-200-year flood event in London and across the UK. Find Out More → Cities Key Themes 2026: Growing divergence Trade restrictions, increasing competition in higher value-added industries, and elevated AI investment will … Read more
Private consumption growth in the Philippines has slowed to its lowest rate since 2010 outside the pandemic period. The main culprit is worsening confidence, which has been hit particularly hard by persistent inflation. Although inflation should subside later in the year, the impact on consumer sentiment will take time to feed through, so we don’t expect a substantial boost in spending this year.
Related Posts Takaichi’s big win doesn’t affect the fiscal outlook for Japan The ruling Liberal Democratic Party’s (LDP) landslide election victory on Sunday doesn’t change our expectation of a primary fiscal deficit of 2%-3% of GDP in FY2026-FY2028 – we still see the deficit only starting to decline from FY2029. We also keep our view … Read more
We have recently added CPI estimates for selected major metros in the US to our US Cities and Regions Service. They shows notable historical variations in inflation between US cities.
As expected, the BoJ maintained its policy rate at 0%-0.1% at Friday’s meeting. With more confidence on the ongoing wage-driven inflation dynamics and a strong appetite for policy normalisation, the BoJ looks more likely to end its zero-interest rate policy in the autumn.
The 2024 federal budget projects a steady diet of wider deficits over the next five years, adding new spending only partly supported by new revenues. The government showed less restraint than we expected, but our analysis finds the new measures will provide a modest boost to GDP and inflation in the near term.
The Bank of Japan left both short-term and long-term policy rates unchanged at Tuesday’s meeting as widely expected. The BoJ was unlikely to change policy this time given the lack of clear evidence on Spring Negotiation pay rises, based on recent comments by the Governor.
Inflation will likely decelerate in 2024 as the impact of imported inflation wanes. We expect the Bank of Japan will end its negative interest rate policy in April after confirming a high wage settlement. But our medium-term projection is that a zero-interest rate policy will take its place and last for years.
The Bank of Japan (BoJ) left short- and long-term policy rates unchanged at -0.1% and around
0%, respectively, at the meeting on Oct.31. However, the BoJ decided to tweak the yield curve
control (YCC) policy by setting the upper bound of 1% as a reference and by making its Japanese Government Bond (JGB) purchase operations more flexible not to rigidly defend the bound.
The Bank of Japan (BoJ) maintained the policy rates at its September meeting, following a tweak in its yield curve control policy in July. Although this decision was widely expected, the markets are starting to speculate policy changes within the coming quarters, especially after the BoJ governor’s recent interview.
As food tends to be purchased often and account for a large part in the consumption basket – 22% in CPI, excluding restaurants – price increases in food give considerable impact on households’ purchasing power.
We project Japan’s CPI inflation will slow in H2 as import costs trend downward. The current record price passthrough is unsustainable given sluggish demand and firms’ weak pricing power.
