NIKKEI225: Gets Boost from Softer Inflation Data – Mixed BoJ Policymakers
Inflation data for Tokyo printed lower than expected for Core and Ex-food and energy. Summary of BoJ opinions show a mixed view on hikes.
- Tokyo Core CPI YoY and Ex Food & Energy lower than expectations
- BoJ members’ views show some dovish outlooks
- NIKKEI225 still trading within range
The NIKKEI225 rallied 1.46% today on weaker inflation data from Japan’s capital and strong retail sales. While the summary of opinions published today revealed some members holding a dovish stance.
BoJ Summary of Opinions
Some central bank officials saw conditions falling into place for hikes in the near future. While others stated that warned of weak consumption and uncertainty from the policies of the incoming US administration.
One member is quoted as saying that BoJ is “Likely to hike in near future”. The comment is echoed by some members who stated the need for preemptive and timely hikes.
However, others saw risks in consumption decline and possible tariffs from the next US administration.
One member stating, “There are high uncertainties over the course of discussions on tax and fiscal policy in Japan and over the policy stance of the new U.S. administration taking office at the beginning of 2025,”
The members seem evenly divided and what plays out going into 2025 will determine how many change their minds, in one direction or another. BoJ Deputy Governor Himino will give a speech and news conference on January 9, which may offer some more clues.
NIKKEI225 Live Chart
Inflation Data Softer than Expected – Retail Sales Stronger
CPI YoY inflation from Tokyo came in higher than analysts’ expectations at 3%, from 2.6% previously. For some economists the number means that hikes are still on the table for the January meeting.
However, Core and Ex Food and Energy both showed lower than expected increases. Core CPI printed at 2.4%, up from last month’s 2.2%
While Ex Food and Energy came in at 1.1%, a touch lower than the previous number of 1.2%.
Retail sales were higher than analysts’ forecasts and YoY increased by 2.8% compared to 1.3%. And the MoM increase was 1.8% compared to -0.2% last month.
NIKKEI225 Remains Within Range
The NIKKEI225 jumped today to test a recent resistance level of 40,274, which was the first high in a series of peaks and troughs since October.
The week looks set to close on a high, with the index gaining 3.74% so far. However, the sharp move for this week has failed to take the NIKKEI225 above the topside of the ongoing range.
Next week may be the test of strength to see if the index can close above the high of the current range.
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