EUR/USD
1.17441
-0.089%
Gold
4952.49
0.335%
Oil
59.741
0.262%
USD/JPY
158.589
0.107%
GBP/USD
1.34910
-0.081%
GBP/JPY
213.958
0.042%
Real-time News
On January 23, Capital Economics reported that the Bank of Japans more optimistic stance on the economic outlook has led it to believe that a rate hike may come sooner than previously expected. At its first policy meeting in 2026, the Bank of Japan kept interest rates unchanged while raising its GDP growth forecasts for the current and next fiscal years. Marcel Thieliant of Capital Economics noted that despite the governments announcement of energy subsidies last November, the Bank of Japan did not lower its inflation forecast, leading him to believe that underlying inflation will no longer remain subdued but will instead rise moderately. With the real policy rate still deeply negative, further tightening is almost a certainty. Even with the possibility of future consumption tax cuts that could distort prices, Capital Economics believes inflationary pressures will remain robust. The firm previously predicted a July rate hike by the Bank of Japan, but now the risks seem to favor an earlier move. Regardless, the firm expects the policy rate to rise to 1.75% by the end of 2027.On January 23, Investinglive analyst Eamonn Sheridan stated that the Bank of Japans decision to hold rates steady limited short-term market reactions, but dissenting opinions and upward revisions to core inflation expectations reinforced market expectations for further monetary tightening later this year. The Bank of Japan maintained its policy rate at 0.75% by an 8-1 vote, with board member Hajime Takada calling for an immediate rate hike to 1.0%. The Bank of Japan kept its core CPI forecast for fiscal year 2025 unchanged at 2.7%, while slightly raising its forecasts for the next few years. The median core CPI forecast for fiscal year 2026 was revised from 1.8% to 1.9%, while the forecast for fiscal year 2027 remained unchanged at 2.0%. More notably, the "core-core" inflation forecast, excluding fresh food and energy prices, was revised upward throughout the forecast period. These revisions further confirm the view that underlying domestic inflationary pressures remain stronger than expected. Todays statement and report still hint at the possibility of further rate hikes, and we may get more information about the timing of rate increases from Bank of Japan Governor Kazuo Ueda.Following the Bank of Japans interest rate decision, the yield on 2-year Japanese government bonds rose from 1.215% to 1.230%.Following the Bank of Japans interest rate decision, 10-year Japanese government bond futures fell, last down 0.17 yen to 131.43 yen.On January 23, the Bank of Japan (BOJ) kept interest rates unchanged on Friday. In its quarterly outlook report, the BOJ raised its economic growth forecasts for fiscal years 2025 and 2026 and maintained its view of a moderate economic recovery. The BOJ also raised its core consumer inflation forecast for fiscal year 2026 to 1.9% from 1.8% three months ago, stating that the risks to the economic and price outlook are roughly balanced. However, the BOJ also noted that core consumer inflation may slow to below 2% in the first half of this year. The BOJ reiterated that it will continue to raise interest rates if economic and price developments meet its expectations. The market is closely watching BOJ Governor Kazuo Uedas press conference for clues on when the central bank might raise interest rates again. Market volatility following Prime Minister Sanae Takaichis announcement of a snap election next month has further complicated the central banks interest rate decision.
