Bank of Japan – Currency Thoughts
Bank of Japan
September 23, 2024
Although analysts were not anticipating a third Bank of Japan rate hike today, the gist of the released statement and subsequent remarks by Governor Ueda contained a more nuanced message than expected.
With firms’ behavior shifting more toward raising wages and prices recently, exchange rate developments are, compared to the past, more likely to affect prices. The effects of the pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane. Japan’s economy has recovered moderately, although some weakness has been seen in part. There remain high uncertainties surrounding Japan’s economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms’ wage- and price-setting behavior.
The latest Bank of Japan decision not to raise its interest rate was unanimous, and it appears that some of the hesitancy reflected concern about the yen’s quick rise from 160 to 140 per dollar and the recent volatility of Japan’s stock market including an single-day plunge of over 1000 points early in August.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan
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