The Bank of Japan will need to proceed carefully with any further policy changes, policy board member Seiji Adachi said, stressing that the central bank’s decision to end easing measures wasn’t a shift toward monetary tightening, the Wall Street Journal reported. “We need to absolutely avoid premature rate increases, which could throw cold water on a chance for the Japanese economy to recover,” Adachi said in a speech on Wednesday.

Japan’s consumer inflation grew at a slower pace in April, but remained above the Bank of Japan’s 2% target amid growing expectations over additional interest-rate increases, the Wall Street Journal reported. Overall consumer prices rose 2.5% from a year earlier in April, compared with the 2.7% increase in March, government data showed Friday. While the rise in food prices excluding fresh food slowed down in April, the end of the government’s utility subsidies is expected to push up consumer prices starting May.

The Japanese economy contracted in the first quarter of 2024, extending a rough patch and signaling that inflation fueled by a weak yen is hurting consumer demand, the Wall Street Journal reported. The economy’s overall performance contrasts with robust earnings reported recently by top Japanese exporters such as Toyota Motor and the stock market’s rise over the past year. The fall in the yen, which recently traded at a 34-year low against the dollar, helps exporters’ competitiveness and tends to lift their profits.

Any future foreign-exchange intervention by Japan to support the yen would likely involve tapping its holdings of US Treasuries, according to Bank of America Corp., Bloomberg News reported. Japanese authorities likely stepped in on two occasions in recent weeks to bolster the yen as it reached the weakest levels in several decades versus the dollar, and they probably used their cash reserves to accomplish that.

Japan’s households cut spending again in March as sticky inflation weighed on sentiment and government subsidies capped costs for utilities, although policymakers are looking for historic wage hikes to be a catalyst for a recovery in coming months, the Japan Times reported. Real outlays decreased 1.2% from a year before, falling for the 13th consecutive month, the ministry of internal affairs reported Friday. The result compared with economists’ forecast of a 2.3% drop.

Bank of Japan Gov. Kazuo Ueda said Wednesday that he is open to the idea of early interest-rate increases if inflation rises at a faster pace than the bank’s projections, the Wall Street Journal reported. “If the outlook for prices is revised upward or if upside risks become high, it will be appropriate for the bank to make an earlier adjustment of the policy interest rate,” Ueda said at an event held by the Yomiuri International Economic Society. The Japanese central bank decided in March to end most of its unconventional easing measures, including negative interest rates.

Japan’s labor shortage remains a serious issue with 51% of companies reporting that they did not have enough employees, according to survey results released last week, the Japan Times reported. As the labor market continues to shrink, companies have raised worsening labor shortages as one of the biggest concerns that could cause their performances to decline, with 313 companies having gone out of business in the fiscal year of 2023 as a result.

Japan’s finance minister declined to confirm whether Japan stepped into the market to support the yen with intervention earlier this week, keeping traders guessing, Bloomberg News reported. “I’m not commenting on it,” Finance Minister Shunichi Suzuki said in response to a question about whether Japan intervened earlier this week. Suzuki was speaking at a press conference in Tbilisi, Georgia, where he attended a series of international gatherings including the Asian Development Bank’s annual meeting.

Japan likely conducted its second currency intervention this week, current account figures from the central bank suggest, in another sign of the government’s intensified battle to prop up the yen, Bloomberg News reported. Tokyo’s latest entry into the market was likely around ¥3.5 trillion ($22.5 billion), based on a comparison of Bank of Japan accounts and money broker forecasts. The BOJ reported Thursday that its current account will probably fall ¥4.36 trillion due to fiscal factors on the next business day of Tuesday.

Japan intervened to prop up the yen after it hit a multidecade low against the dollar on Monday, the Wall Street Journal reported. The currency has plummeted against the dollar this year, hurt by increasing doubts among traders about the timing of U.S. interest rate cuts. The yen weakened to around 160 per dollar on Monday, but bounced back to around 155 per dollar after Japanese authorities started buying yen and selling dollars, according to the people.