Japan warns of faster cost pass-through inflation while BOJ expected to hold rates next week
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The white paper adds a fiscal side voice to a picture already building in this week's data: June core CPI at 1.6% and firms passing on costs faster than during the 2022 Ukraine driven energy shock, alongside flash PMI figures showing services charge inflation at its fastest pace
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4 itemsPreview - BOJ to hold next week, keep inflation overshoot warning. but see risks easing
Japan’s inflation slowed unexpectedly, but BoJ still likely to hike rates in June
The desk expects that the Bank of Japan (BoJ) will proceed with a rate hike in June, despite recent data indicating an unexpected slowdown in inflation. Per the full note from ING Economics, the April inflation rate showed a decline, complicating the BoJ's rate decision. This is significant given the BoJ's longstanding commitment to easing measures, which has been a cornerstone of its monetary policy. Market analysts are interpreting the potential hike as indicative of a shift in the BoJ's policy stance amidst changing economic conditions.