JPY: Mixed picture – Commerzbank
30.08.2024, 09:39

JPY: Mixed picture – Commerzbank

Data out of Japan this morning is mixed. On the one hand, inflation rose slightly more than expected, but on the other hand, the economy is still fragile, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.

BoJ not to raise rates in September

“Prices in the Tokyo area rose 2.6% in August, which was above analysts' expectations. The inflation rate for the Tokyo area is always released three weeks before the national figures, but is considered a good indicator of the national trend. However, excluding food and energy, prices rose only 1.3% year-on-year, although this was slightly higher than the previous month's 1.1%.”

“At the same time, the economy remains shaky. Both industrial production and retail sales fell short of expectations in July, while the unemployment rate rose slightly from 2.5% to 2.7%. All in all, these data do not paint a picture of an economy that desperately needs a rate hike. On the other hand, the BoJ never tires of emphasizing that it is ready to raise rates further if the situation evolves more or less as expected – which, by and large, can be said of today's data.

“Nevertheless, we think that the fundamental picture will prevail for the time being and that the BoJ will not raise rates again at its next meeting in September.”

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