BoJ January meeting summary - one member cited upside inflation risk ...Middle East

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BoJ January meeting summary - one member cited upside inflation risk

Summarising the main points of internset, on inflation and policy:

Inflation Trends:Underlying CPI inflation expected to rise steadily, approaching the 2% target.Labour shortages contribute to persistent inflation through a positive output gap.Balanced upside and downside risks to prices, with potential stagflation if global trade frictions intensify.

Monetary Policy

    Policy Adjustments:

    Support for raising the policy interest rate to 0.5% to ensure stable achievement of the 2% inflation target.Interest rate hike considered neutral relative to market expectations.Real interest rates to remain negative post-hike, with potential for further increases if conditions persist.

    Risks and Considerations:

    Concerns over yen depreciation and potential overheating of financial activities.Need to monitor small and medium-sized firms' wage-raising capacity.High uncertainties warrant cautious communication on future interest rate hikes.

    You'll recall the Bank of Japan hiked rates at this meeting:

    ForexLive Asia-Pacific FX news wrap: USD slammed by Trump, then by the BoJ rate hikeForexLive European FX news wrap: Dollar stays pressured, yen slips in post-BOJ trade This article was written by Eamonn Sheridan at www.forexlive.com.

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