Bankinter | The Governing Council of the Bank of Japan (BoJ) decided by seven votes in favour and two votes against, to raise the benchmark interest rate to 0.25%, from the previous range of 0% – 0.1%. The market consensus expected no change, although it perceived an upward move as a possible risk. In addition, the BoJ unanimously approved a reduction in government bond purchases to a monthly pace of…

Alicia García Herrero (Natixis) | After the Bank of Japan (BoJ) terminated the key non-conventional monetary policy tools in March, namely the negative policy rate and the yield curve control (YCC), evidence on a strengthening virtuous circle between inflation and wages has been limited. However, real wages -which fell by -1.8% year-on-year in February – are unlikely to turn positive soon. Furthermore, services inflation excluding imputed rent softened to +2.9%…

Alicia García Herrero (Natixis)| The Bank of Japan (BoJ) has been in the limelight since major central banks in the world, as specially in Fed, started hiking rates. For months, as Japan began to see a rapid increase in inflation, financial markets started to put depreciating pressure on the Yen and upward pressure on the yield of Japanese Government Bonds (JGBs), capped by the Yield Curve Control (YCC) introduced by…

Alicia García Herrero (Natixis) | The Bank of Japan (BoJ) has begun to highlight the rising inflation bias. At the Lower House, Governor Ueda testified on June 9th that corporate price-setting behavior has been shifting upward. Furthermore, as the spring wage negotiation resulted in the largest wage increase in 30 years, inflation could surprise on the upside.Price transfer of higher input costs has become broad based. For sure, small companies,…