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27/05/24
148
JPY Flat as BoJ’s Ueda Advises Caution
On Monday, the Japanese yen was calm after drifting last week and USD/JPY traded at about 156.85, 0.09% lower for the day.
The Bank of Japan has been an exception as it will likely hike interest rates while other major central banks are considering cutting rates as inflation eases. The BoJ and its peers share a determination to move with caution within an uncertain economic landscape.
The central banks are all trying to achieve 2% inflation in a sustainable manner. For the Bank of England, Federal Reserve, and most other central banks, this means pushing inflation down. For the BoJ however it means hiking after decades of deflation and interest rates at about zero.
Japan’s path to increase inflation has not been easy. April’s core CPI, which was released on Friday, slowed for the second consecutive month and dropped from 2.6% to 2.2% y/y. This was the same as the market estimate. The headline reading dropped from 2.7% in March to 2.5% y/y.
On Monday, BoJ Governor Ueda said that although the central bank faced difficult challenges in tightening policy that were unique, progress was being made in increasing inflation expectations.
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