Japan's Nikkei share average ended higher on Friday, driven by chip-related heavyweights, and posted a record fiscal-year gain in terms of points amid heavy foreign buying, Reuters reported. The index hit successive record highs this month, after breaking levels on Feb. 22 last seen in 1989 during the country's bubble economy. The rally was supported by foreign buying on a weaker yen and expectation that the Bank of Japan will stick with loose monetary policy. The index rallied 12,328 points in the fiscal year ending on Friday, marking its biggest gain on an absolute basis.
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In the hours after the yen hit a 34-year low on Wednesday, Japanese officials put currency traders on notice: Keep this up, and we’ll act forcefully in the market to stem the slide, Bloomberg reported. The message was heeded, at least initially. After coming within a whisker of touching 152 per dollar — a level that a slew of market observers said would likely prompt authorities to intervene directly — the yen reversed course on warnings from Japan’s finance minister and then a news report that the nation’s economic authorities were gathering for an unscheduled meeting.
The Bank of Japan on Friday highlighted the need to enhance its research and analytical capabilities in the first medium-term strategic plan compiled under academic-turned governor Kazuo Ueda, who took office in April last year, Reuters reported. “The Bank will enhance its capabilities in policy-making, research and analysis in fulfilling its mission of achieving price and financial stability,” the BOJ said, outlining key principles of its business operations from fiscal 2024 through 2028.
Japan’s consumer inflation picked up in February, adding to speculation that the Bank of Japan may raise interest rates again later this year, the Wall Street Journal reported. Overall consumer prices rose 2.8% from a year earlier in February, compared with the 2.2% increase in January, government data showed Friday. Food prices continued to rise, while the effects of the government’s support for energy bills tapered off.
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The Bank of Japan (BOJ) ended eight years of negative interest rates and other remnants of its unorthodox policy on Tuesday, making a historic shift away from its focus on reflating growth with decades of massive monetary stimulus, Reuters reported. While the move was Japan's first interest rate hike in 17 years, it still keeps rates stuck around zero as a fragile economic recovery forces the central bank to go slow on further rises in borrowing costs, analysts say.
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The Bank of Japan has started to make arrangements to end its negative interest rate policy at the March 18-19 meeting, Jiji news agency reported on Thursday. A number of major firms this week announced wage hikes above those of 2023, heightening expectations that the rosy pay trends will give the central bank leeway to make the key policy shift. Sources have told Reuters that the central bank will debate the end of its negative rate policy next week if Friday's preliminary survey on big firms' wage talks outcome yield strong results.
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The Japanese government is discussing officially stating that the country’s economy has overcome deflation, Kyodo reported Saturday, Bloomberg News reported. The government will consider making the statement after taking into account this year’s wage negotiations to check if pay is increasing in accordance with rising prices, according to the report. The proposal includes Prime Minister Fumio Kishida and other members of the cabinet publicly saying that the country has exited deflation at meetings and press conferences, as well as stating it in monthly economic reports, Kyodo reported.
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Japan’s job market remained tight in January, keeping pressure on companies to pledge solid wage increases in annual negotiations currently underway with labor unions. The unemployment rate fell to 2.4% from a revised 2.5% a month earlier, the ministry of internal affairs reported Friday, sliding to the lowest level since early 2020, Bloomberg News reported. The outcome was in line with economists’ consensus estimates. Another report from the labor ministry showed the job-to-applicants ratio held steady at 1.27 in January, matching the median estimate by analysts.
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Japan's core consumer inflation slowed for a third straight month in January but beat forecasts and held at the central bank's 2% target, keeping alive expectations it will end negative interest rates by April, Reuters reported. The 2.0% gain in the core consumer prices index (CPI) was slower than the 2.3% increase in December, internal affairs and communications ministry data showed on Tuesday, underscoring views waning cost-push inflation from commodity imports could ease the pain of higher living costs.
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Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world's third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy, Reuters reported. Some analysts are warning of another contraction in the current quarter as weak demand in China, sluggish consumption and production halts at a unit of Toyota Motor Corp. all point to a challenging path to an economic recovery.
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