Iran War Worsens BOJ’s Stagflation Dilemma, Postpones Rate Hike

Treść źródłowa

Source: https://www.e-stat.go.jp/en/stat-search/file-download?statInfId=000032103932&fileKind=1 Note: See text for how new government energy subsidies are distorting measures of inflationKey Points:The Iran war heightens BOJ’s stagflation dilemma: whether to raise rates or keep them the same for longer; either way, its decision will alleviate one problem while worsening the otherSome indicators are telling the BOJ to raise rates now; others are telling it to delay; so traders believe the next rate hike has been postponed to sometime between April and JulyHealthy core inflation (except food & energy) dipped further below BOJ’s 2% goal in January, while unhealthy food/energy inflation remains far above 2%, and the war will likely raise it furtherWages are still far below the 3% nominal growth BOJ says is indispensable to reaching 2% inflation, and, by some measures, decelerating; real wages continue to fallDespite the war, interest rates on ten-year Japan Government Bonds have remained within the trading range of the past six months, and so has the yen/dollar value. So, financial markets are not forcing an early hikeHow high will BOJ bring the overnight interest rate in 2027 or 2028?(This Memo goes only to paid subscribers. If you are a free subscriber, you will continue to receive my regular Posts, but only the “key points” of my Memos. You can get instant access to Memos by subscribing for $50 per year. Alternatively, you can buy just this Memo by subscribing for a month for $5. You’ll get instant access, and then you can cancel. This will entitle you to all the Memos I put…