Consumer inflation in Tokyo grew at a slower pace than expected in August, but the core figure, which excludes fresh food and energy costs, remained at its highest level in over 40 years, indicating that inflationary conditions in Japan remain high and putting pressure on the Bank of Japan to eventually tighten policy.
The spike in retail inflation has raised uncertainty for investors and savers, with expectations of interest rate cuts being pushed to the next fiscal year and the possibility of a rate hike. The Reserve Bank of India projects inflation to stay above 5% until the first quarter of 2024-25, and food price pressures are expected to persist. While inflation may impact stock market returns, gold and bank deposit rates are expected to remain steady.
Bank of Japan Governor Kazuo Ueda stated that underlying inflation in Japan remains below the bank's 2% target, leading to the decision to maintain the current approach to monetary policy, despite core consumer inflation staying above the target for the 16th consecutive month.
Japan's inflation is "clearly in sight" of the central bank's target, according to board member Naoki Tamura, suggesting the possibility of ending negative interest rates early next year.
Euro zone inflation holds steady in August, but underlying price growth falls, complicating decisions for the European Central Bank as it considers a pause in rate hikes amid a slowdown in economic growth.
The gold market remains steady despite stable inflation pressures, suggesting that the US central bank may be able to end its tightening cycle.
Pakistan's inflation rate remained above target in August at 27.4%, driven by reforms linked to an IMF loan that have fueled price pressures and declines in the rupee currency.
The Federal Reserve is expected to hold interest rates steady this month, but inflation could still lead to additional rate increases.
Former Bank of Japan board member Goushi Kataoka believes that the central bank can only shift away from its easy monetary policy once it has achieved its 2% inflation target sustainably, with wage negotiations in 2024 playing a key role in this process. Kataoka expects the Bank of Japan to gradually remove its yield curve control and negative interest rate policies before exiting its easy policy. He also emphasizes the importance of cooperation between the Japanese government and central bank in achieving the inflation target.
Annual core inflation in Mexico slowed to a 20-month low in August, below market forecasts, as the central bank maintains high interest rates to curb price increases.
The Bank of Japan has signaled a possible early end to its easy money stance, with the central bank considering interest rate hikes and an early end to its bond-buying policy, which caught markets off guard and caused the yen to surge and Japanese government bond yields to reach a 9-year high.
India's retail inflation eased in August due to moderating food prices, but remained above the central bank's target range for a second consecutive month, prompting policymakers to remain vigilant.
The latest inflation report is expected to show a steady increase in consumer prices, with economists predicting a 3.6% overall inflation compared to last year, indicating that inflation is gradually coming down but still remains above the Federal Reserve's target.
Japan's annual wholesale inflation slowed for the eighth consecutive month in August, providing relief for households and retailers affected by previous increases in raw material imports.
The dollar remains steady ahead of a key U.S. inflation report, but rises against the yen as traders digest comments from Japan's central banker on a possible early exit from negative interest rates.
Euro zone consumer inflation in August remained more than twice the European Central Bank's target, with a year-on-year rate of 5.2%, although slightly lower than initially estimated, according to Eurostat.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
Asia-Pacific markets fell as the Bank of Japan kept rates unchanged and noted a "moderate recovery" in the economy, while Japan's private sector activity expanded at its slowest pace since February and the country's August inflation rate remained above the BOJ's target for the 17th straight month.
The Bank of Japan has decided to maintain ultra-low interest rates and continue supporting the economy until inflation reaches its target, indicating a slow withdrawal from its stimulus program and causing the yen to fall.
Japanese consumer inflation grew above expectations in August, potentially signaling a move away from negative interest rates as the Bank of Japan meets to discuss its monetary policy.
Singapore's consumer price index inflation eased slightly in August, largely due to softer services and food prices, although increased fuel prices continued to support inflation; however, the Monetary Authority of Singapore (MAS) expects core inflation to further moderate in the coming months.
The Bank of Japan policymakers are divided on how soon the central bank could end negative interest rates, with some members believing it may take a significant amount of time before revising the policy, while others believe the 2% inflation target has come within reach and could be assessed in early 2024. The central bank's commitment to ultra-loose monetary settings remains due to uncertainty regarding the achievement of its inflation target.
Japan's core inflation slowed for the third consecutive month in September, mainly due to falling fuel costs, providing some relief for the fragile economic recovery; however, factory output remained flat in August, indicating the negative impact of weak global demand and China's economy.
The Federal Reserve's preferred measure of inflation decreased in August, indicating that efforts to combat inflation are progressing, although there are still price growth pressures that could lead to further interest rate hikes by the central bank.
The Bank of Japan is considering the eventual end of its ultra-loose monetary policy, with some policymakers discussing the conditions and timing of a future exit, according to a summary of opinions from their September meeting, leading to a rise in government bond yields.
Overall inflation has moderated recently in the United States and euro area, but core inflation remains sticky, creating a challenge for central banks trying to meet their inflation targets. Financial conditions have eased, complicating the fight against inflation by preventing a slowdown in aggregate demand. The combination of loose financial conditions and a monetary policy tightening cycle may have dulled the effectiveness of monetary policy. There are risks of a repricing of risk assets and potential vulnerabilities in the financial sector, emphasizing the need for central banks to remain determined in their fight against inflation.
Japan's central bank is under pressure to reconsider its ultraloose monetary policy due to factors such as a weak yen, post-pandemic inflation, and the Russia-Ukraine war.
The dollar remains steady as U.S. producer prices show a moderation in inflation, leading to speculation that the Federal Reserve is done with interest rate hikes.
The report on consumer prices in September shows that inflation remains steady but still poses challenges, leading economists to predict that the Federal Reserve will keep the possibility of a final interest rate increase this year open.
Inflation has remained high, with the latest figures showing a rate of 3.7%, and more rate hikes may be on the horizon as the Fed aims to bring inflation down to around 2% in the short term.
Japan's core inflation in September slowed below 3% for the first time in over a year but remained above the central bank target, maintaining expectations that policymakers will phase out ultra-easy monetary policy.
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