NIKKEI225 Ponders Further Action from BoJ as Tokyo Inflation Continues to Expand
Today’s data from Japan’s capital showed inflation quickened at fastest pace in 2 years, raising expectations of further hikes.
- Core Tokyo CPI 2.5%
- Analysts’ forecasts see inflation reaching 3%
- BoJ under pressure to apply more hikes
The NIKKEI225 gained 0.22% during the London trading session, bringing the index to recover almost half of the drop sustained on Monday of 3.36%.
The [[USDJPY]] although lower than recent peaks remains stubbornly high. Raising another concern for the BoJ as it seeks to bolster a weak yen and shield from imported inflation.
Tokyo CPI Data Fails to Rattle NIKKEI225
Today’s Tokyo CPI YoY data printed as forecast at 2.5% but showed a small increase from last month at 2.4%.
Core CPI YoY showed a larger increase from 3% to 3.4% this month. The increase in inflation data will have the BoJ pondering further hikes as it attempts to keep inflation at its 2% target.
This month’s data is a third consecutive rise in inflation in Japan’s capital, which acts as a leading indicator for national inflation.
The NIKKEI225 dropped 200 points at one point after the news, or 0.50%, but quickly recovered the lost ground.
NIKKEI225 Live Chart
Analysts Expect the BoJ to Continue Raising Rates
While the NIKKEI225 is lagging way behind its global peers the market has showed considerable stability.
Signs of rising inflation are creating a greater perception that the central bank will act again soon. Some analysts are predicting inflation will reach 3%.
A weak yen and rising energy and food prices are the main contributors to the rise in prices. The weak yen is a particular concern that analysts see will be addressed by the central bank with rate hikes.
The BoJ target is at 2% and the central bank raise its 2025 forecast for inflation from 1.9% to 2.4%. Its main concerns were imported inflation and rising food costs.
Analysts expect the BoJ to raise at least another 2 times through H1 2025, to bring the main interest rate to 1% from 0.50%.
ABOUT THE AUTHOR
See More
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker