BOJ to focus on inflation, JGB buyingーNHK WORLD-JAPAN NEWS
let’s look at the topics we’ll be tracking in the week ahead japan will release key economic gauges one after another this week’s Bispix feature is on the Bank of Japan’s policy meeting scheduled to wrap up on Tuesday miso Securities chief economist Kobayashi Shun says for insight on the BOJ’s thinking we should pay attention to changes in the quality of inflation recent inflation trends show price rises do not necessarily derive from external factors like higher material prices or a weaker yen instead chances are high that internal or structural factors are now pushing up prices salaries are rising due to a labor shortage on the other hand supply and demand imbalances are pressuring prices such as soaring costs of daily necessities like rice kobayashesi says the BOJ will likely forgo hiking interest rates at its June meeting he explains policymakers need to wait until later this summer to first assess the economic impact of upcoming events such as possible US tariffs by early July the US is supposed to conclude its tariff talks including those with Japan the outcome will clarify the likely impact of Trump’s tariffs on Japan and the global economy so I think the BOJ could possibly hike rates at its end of July meeting at the earliest kobayashi notes another factor that could affect the timing of BOJ rate hikes is the US Federal Reserve which might start lowering rates now another focus of next week’s meeting is the BOJ’s plans to buy Japanese government bonds last July the central bank announced a key JGB buying strategy the BOJ said it intended to roughly have its monthly purchases to around 3 trillion yen or about $21 billion by the first quarter of 2026 the move is part of its exit from its ultra easy monetary policy what to do from the second quarter of 2026 will be up for discussion so far there have not been any major incidents reported due to the BOJ’s plan to taper its JGB purchases therefore the bank will likely continue with the reduction but Kobayashi warns smaller bomb purchases could have unexpected effects on the financial market depending on how the plan is implemented reducing JGB purchases or reducing the central bank’s total assets means that the reserve funds commercial banks deposit with the BOJ will also be reduced if those funds are too low at some point in the future the financial markets could suffer a shortage of short-term funds the BOJ must keep inflation in check while avoiding any moves that could cause excessive market volatility a delicate balance as it proceeds towards its goal of ending its easy monetary policy
The Bank of Japan’s upcoming policy meeting could reveal clues about the central bank’s inflation views and its future plans to buy Japanese Government Bonds. #business #japan
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