CoinVoice has recently learned that analysts from the IG Group indicate that the Bank of Japan (BOJ) is facing the challenge of balancing persistent inflation pressures with slowing economic growth. The price of rice, a staple food for Japanese households, has doubled in the past year, highlighting the severity of inflationary pressures.
Since April 2022, the core inflation rate has remained at or above the Bank of Japan's 2% target, increasing pressure for interest rate hikes.
However, economic growth has noticeably deteriorated, with GDP contracting at an annualized rate of 0.2% in the first quarter. Additionally, due to rising inflation, real wages fell by 1.8% year-on-year, which may suppress consumer spending and further constrain economic growth. While the Bank of Japan is likely to keep interest rates unchanged at today’s meeting, any hawkish guidance could provide significant support for the yen. Close attention should be paid to the policy statement and comments from the press conference for hints regarding future tightening measures. [Original link]