Japan’s inflation beats forecasts, end of negative rates in sight
Published: 04:02 PM,Feb 27,2024 | EDITED : 08:02 PM,Feb 27,2024
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TOKYO: Japan’s core consumer inflation slowed for a third straight month in January but beat forecasts and held at the central bank’s 2% target, keeping alive expectations it will end negative interest rates by April.
The 2.0% gain in the core consumer prices index (CPI) was slower than the 2.3% increase in December, internal affairs and communications ministry data showed on Tuesday, underscoring views waning cost-push inflation from commodity imports could ease the pain of higher living costs.
However, the gain beat median market forecasts for a 1.8% rise, reaffirming expectations hefty pay hikes will be offered by big firms at labour-management wage talks on March 13 that would pave the way for the Bank of Japan (BOJ) to end negative interest rates in March or April.
“The January CPI leaves open the possibility of the BOJ hiking its policy rate at the March meeting if preliminary Shunto results due a few days before the meeting are encouraging,” said Marcel Thieliant at Capital Economics.
“We still consider an April hike more likely. For one thing, inflation will jump well above 2% in February as base effects from the launch of energy subsidies a year ago kick in, which would allow the Bank to tell a more compelling story that inflation remains strong,” he added. — Reuters
The 2.0% gain in the core consumer prices index (CPI) was slower than the 2.3% increase in December, internal affairs and communications ministry data showed on Tuesday, underscoring views waning cost-push inflation from commodity imports could ease the pain of higher living costs.
However, the gain beat median market forecasts for a 1.8% rise, reaffirming expectations hefty pay hikes will be offered by big firms at labour-management wage talks on March 13 that would pave the way for the Bank of Japan (BOJ) to end negative interest rates in March or April.
“The January CPI leaves open the possibility of the BOJ hiking its policy rate at the March meeting if preliminary Shunto results due a few days before the meeting are encouraging,” said Marcel Thieliant at Capital Economics.
“We still consider an April hike more likely. For one thing, inflation will jump well above 2% in February as base effects from the launch of energy subsidies a year ago kick in, which would allow the Bank to tell a more compelling story that inflation remains strong,” he added. — Reuters