Previous Trading Days Events 23 Jan 2024

The BOJ decided that the 0.1 policy rate will be maintained, an ultraeasy monetary policy as per the news yesterday. The decision was widely expected, as policymakers allow more time to see if wage rises will be able to keep inflation sustainably at its 2 target.

The central bank also suggested that an end to negative interest rates could take place soon. Negative rates have been in place since 2016.

BOJ Governor Kazuo Ueda The prospects of seeing trend inflation hit 2 percent are gradually heightening. That is a desirable development. But it is hard to quantify how close we have come.

Source httpswww.reuters.commarketsasiabojdebatesignsprogresstowardspricegoalpolicyseensteady20240122

The late report at 2345 yesterday showed that New Zealand consumer inflation grew at a slower pace in the December quarter, meeting expectations. Highinterest rates are having a desirable effect on inflation, however, it is not yet enough as the target level is still way lower.

The Consumer Price Index CPI inflation rose 0.5 quarteronquarter, slowing from the 1.8 growth seen in the prior quarter. On an annualised basis, CPI rose 4.7 in the December quarter, easing from the previous quarters 5.6 growth.

Inflation is above the RBNZs 1 to 3 annual target range and so interest rates are expected to remain higher for longer until inflation falls within its target range. The RBNZ has not stated anything about trimming rates soon.

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