The first set of interest rate moves by major central banks in 2025 indicates that it will be a year in which heavyweight economies, both developed and emerging, will diverge for a period.<o:p></o:p>
2024 saw the biggest coordinated global interest rate cut since the financial crisis - almost 15 years ago as inflation reigned in. However, the current round in 2025 has begun with policymakers manoeuvring through an uncertain economic backdrop.<o:p></o:p>
Among the G10 central banks that regulate the most actively traded currencies, three of the four that met last month &mdash; Sweden, the ECB, and Canada &mdash; persisted with their rate-cutting cycles. On the other hand, Japan, which seldom increases rates, hiked them for the second time in under a year.<o:p></o:p>
<h2 class="MsoNormal">Central banks grapple with uncertainty<o:p></o:p></h2>
The US Federal Reserve and Norway's Norges Bank stayed on the sidelines, and the Bank of England has cut rates this week. The changes come Donald Trump returned to the white house with a bang, launching trade tariff salvos and plans to shred multilateralism and regulation.<o:p></o:p>
The Bank of Canada explicitly cautioned about the risks to its economy, and the Federal Reserve chief indicated the US Central Bank is in no rush to cut rates anytime soon.<o:p></o:p>
In emerging markets, three central banks cut and one raised rates in January.<o:p></o:p>
While South Africa and Indonesia chose to keep their rates unchanged, turkey reduced them by 0.25 per cent, bringing them down to an eye-watering 45 per cent. Brazil has been struggling owing to concerns about its debt load.<o:p></o:p>
At its most recent meeting, it hiked rates by one per cent and has already pencilled in another increase for March. The Reserve Bank of India cut rates for the first time since May 2020, while China's central bank kept its powder dry as it waited for the tariff hit from Washington.<o:p></o:p>
Most major central banks in the developed market, barring Japan, are expected to continue with their bias for easing policy this year. However, if Trump's trade battle turns ugly and inflationary as expected, central banks in Europe, Canada, and Australia are likely to be hit the hardest.<o:p></o:p>
The real question is: should policymakers be wary of inflationary pressures as an expected fallout from the tariff wars or should they focus on growth measures? For now, central banks are grappling with uncertainty in 2025's foggy economic landscape.<o:p></o:p>
(With inputs from the agencies)<o:p></o:p>

Business & Economy: 2024 saw the biggest coordinated global interest rate cut since the financial crisis. However, the current round in 2025 has begun with policymakers manoeuvring through an uncertain economic backdrop.

The first set of interest rate moves by major central banks in 2025 indicates that it will be a year in which heavyweight economies, both developed and emerging, will diverge for a period. 2024 saw the biggest coordinated global interest rate cut since the financial crisis - almost 15 years ago as inflation reigned in. However, the current round in 2025 has begun with policymakers manoeuvring through an uncertain economic backdrop. Among the G10 central banks that regulate the most actively traded currencies, three of the four that met last month — Sweden, the ECB, and Canada — persisted with their rate-cutting cycles. On the other hand, Japan, which seldom increases rates, hiked them for the second time in under a year. Central banks grapple with uncertainty The US Federal Reserve and Norway's Norges Bank stayed on the sidelines, and the Bank of England has cut rates this week. The changes come Donald Trump returned to the white house with a bang, launching trade tariff salvos and plans to shred multilateralism and regulation. The Bank of Canada explicitly cautioned about the risks to its economy, and the Federal Reserve chief indicated the US Central Bank is in no rush to cut rates anytime soon. In emerging markets, three central banks cut and one raised rates in January. While South Africa and Indonesia chose to keep their rates unchanged, turkey reduced them by 0.25 per cent, bringing them down to an eye-watering 45 per cent. Brazil has been struggling owing to concerns about its debt load. At its most recent meeting, it hiked rates by one per cent and has already pencilled in another increase for March. The Reserve Bank of India cut rates for the first time since May 2020, while China's central bank kept its powder dry as it waited for the tariff hit from Washington. Most major central banks in the developed market, barring Japan, are expected to continue with their bias for easing policy this year. However, if Trump's trade battle turns ugly and inflationary as expected, central banks in Europe, Canada, and Australia are likely to be hit the hardest. The real question is: should policymakers be wary of inflationary pressures as an expected fallout from the tariff wars or should they focus on growth measures? For now, central banks are grappling with uncertainty in 2025's foggy economic landscape. (With inputs from the agencies)

2025's foggy economic landscape weighs on the monetary outlook

The record-high increase in base salary for regular workers in Japan is proof that the economy is showing signs of improvement.&nbsp;

This is fuelling market expectations of a rate hike from the Bank of Japan. The increase in wages is in response to weak household spending.&nbsp;

According to Friday's report by the labour ministry, full-time workers' base pay rose 2.8 per cent from a year ago. This is the largest growth for similar data going back to 1994.&nbsp;

Regular worker's wages are a more reliable indicator of salary trends. This does not include incentives or overtime and so does not suffer from sampling errors.&nbsp;

However, earnings in actual currency did not change, which was a first in three months and better than what economists had predicted. Market players are keeping an eye on pay patterns to predict when the Bank of Japan will hike interest rates next.&nbsp;

Pay changes are a major factor in attaining a good economic development cycle. The outcome had little effect on the value of the yen. Whether a rate hike by the central bank occurs in December or January is still a matter of debate among economists and market participants.&nbsp;

The next policy decision from the central bank is expected on December 19th. The chief Japan economist at JP-Morgan securities, Ayako Fujita, predicts a rate hike in December. Fujita said, "We can judge that data so far has been on track and supports a BOJ rate hike though the bank will also consider other data including data from the US."&nbsp;

The record-high increase in base salary for regular workers in Japan is proof that the economy is showing signs of improvement. This is fuelling market expectations of a rate hike from the Bank of Japan.

The record-high increase in base salary for regular workers in Japan is proof that the economy is showing signs of improvement. This is fuelling market expectations of a rate hike from the Bank of Japan. The increase in wages is in response to weak household spending. According to Friday's report by the labour ministry, full-time workers' base pay rose 2.8 per cent from a year ago. This is the largest growth for similar data going back to 1994. Regular worker's wages are a more reliable indicator of salary trends. This does not include incentives or overtime and so does not suffer from sampling errors. However, earnings in actual currency did not change, which was a first in three months and better than what economists had predicted. Market players are keeping an eye on pay patterns to predict when the Bank of Japan will hike interest rates next. Pay changes are a major factor in attaining a good economic development cycle. The outcome had little effect on the value of the yen. Whether a rate hike by the central bank occurs in December or January is still a matter of debate among economists and market participants. The next policy decision from the central bank is expected on December 19th. The chief Japan economist at JP-Morgan securities, Ayako Fujita, predicts a rate hike in December. Fujita said, "We can judge that data so far has been on track and supports a BOJ rate hike though the bank will also consider other data including data from the US."

Japan base pay gains by record, keeps door open for BOJ hike

Japan’s Prime Minister Fumio Kishida's resignation is more likely to cause a hiccup in the Bank of Japan's plan to steadily lift interest rates from near zero.

Then there could be some acceptance of pause for a considerable period: not only in the way the leadership race of the ruling party shapes up but also in the way market moves become key in the political debate on the favoured pace of rate hikes, analysts say.

Kishida, who handpicked Kazuo Ueda as BOJ governor last year, said on Wednesday he will not stand in his ruling Liberal Democratic Party's (LDP) leadership race in September.

The BOJ worked in tandem with Kishida's administration to preach the benefits of higher wages. Days before the BOJ's rate hike in July, Kishida said his backing toward an exit from ultra-low interest rates signified a policy normalisation that would support Japan's shift to a growth-driven economy.

Kishida's exit creates a political vacuum at a high level of uncertainty over economic policy and complicates BOJ's efforts to pull off a smooth exit from easy monetary conditions in coordination with the government.

Most assumed front-runners have backed the policy, which includes only very gradual increases in Japan's current ultralow interest rates, mainly as a means to keep sharp falls in the yen at bay.

Shigeru Ishiba, viewed as one of the frontrunners to take over from Kishida as the next LDP leader and therefore premier, would not comment directly but said the BOJ was "on the right policy track" in raising rates slowly, according to Reuters.

Other contenders, such as party heavyweights Toshimitsu Motegi and Taro Kono, have also repeatedly spoken of the need for higher interest rates and hawkish communication by the BOJ.

The only candidate urging aggressive easing is dark horse Sanae Takaichi, who belongs to a party group that supported former premier Shinzo Abe's stimulus policies.

"Takaichi might be an exception, but most candidates don't seem to be against the BOJ's policy normalisation. If so, there won't be much disruption to the bank's long-term rate hike path," said veteran BOJ watcher&nbsp;Mari&nbsp;Iwashita.

Japan’s Prime Minister Fumio Kishida's resignation is more likely to cause a hiccup in the Bank of Japan's plan to steadily lift interest rates from near zero. Then there could be some acceptance of pause for a considerable period: not only in the way the leadership race of the ruling party shapes up but also in the way market moves become key in the political debate on the favoured pace of rate hikes, analysts say.

Japan’s Prime Minister Fumio Kishida's resignation is more likely to cause a hiccup in the Bank of Japan's plan to steadily lift interest rates from near zero. Then there could be some acceptance of pause for a considerable period: not only in the way the leadership race of the ruling party shapes up but also in the way market moves become key in the political debate on the favoured pace of rate hikes, analysts say. Kishida, who handpicked Kazuo Ueda as BOJ governor last year, said on Wednesday he will not stand in his ruling Liberal Democratic Party's (LDP) leadership race in September. The BOJ worked in tandem with Kishida's administration to preach the benefits of higher wages. Days before the BOJ's rate hike in July, Kishida said his backing toward an exit from ultra-low interest rates signified a policy normalisation that would support Japan's shift to a growth-driven economy. Kishida's exit creates a political vacuum at a high level of uncertainty over economic policy and complicates BOJ's efforts to pull off a smooth exit from easy monetary conditions in coordination with the government. Most assumed front-runners have backed the policy, which includes only very gradual increases in Japan's current ultralow interest rates, mainly as a means to keep sharp falls in the yen at bay. Shigeru Ishiba, viewed as one of the frontrunners to take over from Kishida as the next LDP leader and therefore premier, would not comment directly but said the BOJ was "on the right policy track" in raising rates slowly, according to Reuters. Other contenders, such as party heavyweights Toshimitsu Motegi and Taro Kono, have also repeatedly spoken of the need for higher interest rates and hawkish communication by the BOJ. The only candidate urging aggressive easing is dark horse Sanae Takaichi, who belongs to a party group that supported former premier Shinzo Abe's stimulus policies. "Takaichi might be an exception, but most candidates don't seem to be against the BOJ's policy normalisation. If so, there won't be much disruption to the bank's long-term rate hike path," said veteran BOJ watcher Mari Iwashita.

Kishida's exit stirs political uncertainty, casting shadows on BOJ’s delicate rate hike strategy

A senior executive at Nomura Holdings Inc. defended the Bank of Japan's decision to raise interest rates last week despite the turmoil it's causing in global equity markets. Christopher Willcox, the Japanese brokerage's head of trading and investment banking, came out in support of the BOJ move in an interview with Bloomberg Television after global markets tumbled.

This global stock market rout was largely due to fears over the outlook of the US economy and a divergence of central bank policies. Japan's benchmark Topix Index suffered a record two-day decline before rebounding Tuesday, as worries over further interest-rate increases and gains in the yen spooked investors.

Willcox said, "The BOJ has been wholly vindicated. Unwinding is likely to be bumpy." His remarks were during a period when Nomura's share was running through huge volatility. They dropped around 19 per cent on Monday—its biggest slide in at least five decades—to wipe out much of this year's gain despite better earnings. Nomura was up 11 per cent on Tuesday as Topix recovered 9.3 per cent.

He also commented on the implications for the carry trade—a strategy in which investors borrow in low-interest currencies to invest in higher-yielding markets. Many closed positions following the rate hike by the BOJ. "If they did not move, it would have only gotten bigger," said Willcox. "The BOJ is playing very smartly."

The move by the Bank of Japan is more of a precautionary step against the possible risks of long-term low-interest rates, though it has immediate repercussions on markets. While some volatility may be witnessed further down the road, current leadership at Nomura believes that the BOJ strategy will, in the long run, help financial markets—underlining the tightrope that central banks have to walk with their policies.

A senior executive at Nomura Holdings Inc. defended the Bank of Japan's decision to raise interest rates last week despite the turmoil it's causing in global equity markets.

A senior executive at Nomura Holdings Inc. defended the Bank of Japan's decision to raise interest rates last week despite the turmoil it's causing in global equity markets. Christopher Willcox, the Japanese brokerage's head of trading and investment banking, came out in support of the BOJ move in an interview with Bloomberg Television after global markets tumbled. This global stock market rout was largely due to fears over the outlook of the US economy and a divergence of central bank policies. Japan's benchmark Topix Index suffered a record two-day decline before rebounding Tuesday, as worries over further interest-rate increases and gains in the yen spooked investors. Willcox said, "The BOJ has been wholly vindicated. Unwinding is likely to be bumpy." His remarks were during a period when Nomura's share was running through huge volatility. They dropped around 19 per cent on Monday—its biggest slide in at least five decades—to wipe out much of this year's gain despite better earnings. Nomura was up 11 per cent on Tuesday as Topix recovered 9.3 per cent. He also commented on the implications for the carry trade—a strategy in which investors borrow in low-interest currencies to invest in higher-yielding markets. Many closed positions following the rate hike by the BOJ. "If they did not move, it would have only gotten bigger," said Willcox. "The BOJ is playing very smartly." The move by the Bank of Japan is more of a precautionary step against the possible risks of long-term low-interest rates, though it has immediate repercussions on markets. While some volatility may be witnessed further down the road, current leadership at Nomura believes that the BOJ strategy will, in the long run, help financial markets—underlining the tightrope that central banks have to walk with their policies.

BOJ's rate hike spurs market mayhem as Nomura takes historic tumble

The Bank of Japan (BOJ) announced its decision to maintain ultra-low interest rates on Friday, with the objective of keeping borrowing costs low. <o:p></o:p>

According to Reuters, the central bank, in its quarterly outlook report, projected that inflation would hover near its 2 per cent target over the next three years. <o:p></o:p>

This decision indicates the BOJ's preparation to potentially increase borrowing costs later in the year.<o:p></o:p>

The BOJ has reaffirmed its stance to purchase government bonds at a monthly rate of approximately 6 trillion yen ($38.45 billion), following the guidance set in March. <o:p></o:p>

As expected, the central bank kept its short-term interest rate target within the range of 0-0.1 per cent, a decision made just a month earlier during its historic departure from a massive stimulus program.<o:p></o:p>

According to the board's projections, core consumer inflation is expected to reach 2.8 per cent for the fiscal year starting in April, gradually narrowing to 1.9 per cent in both fiscal years 2025 and 2026. <o:p></o:p>

The "core core" index, excluding fuel costs, is forecasted to rise to 1.9 per cent in fiscal years 2024 and 2025, before accelerating to 2.1 per cent in 2026.<o:p></o:p>

Market attention has turned to Governor Kazuo Ueda's remarks in the post-meeting press conference, particularly regarding the impact of the weakening yen on the timing of the next rate hike. <o:p></o:p>

The yen's recent depreciation against the dollar, worsened by reduced expectations of an imminent US interest rate cut, has prompted concerns among policymakers. <o:p></o:p>

Despite reassurances from the BOJ that it won't aggressively raise rates following the cessation of eight years of negative interest rates in March, pressure mounts on Ueda to address the currency's decline.<o:p></o:p>

Governor Ueda said that the possibility of further rate hikes remains contingent upon increased wage gains leading to broader price hikes by firms. <o:p></o:p>

This scenario could initiate a cycle of rising wages and prices. <o:p></o:p>

However, Tokyo's core inflation figures, released on Friday, fell below the BOJ's 2 per cent target for April, signalling uncertainty in the price outlook.<o:p></o:p>

Economists are divided on the timing of the BOJ's next rate hike, with some predicting action in the third quarter, while others foresee a potential move between October and December, or even later. <o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

The Bank of Japan (BOJ) announced its decision to maintain ultra-low interest rates on Friday, with the objective of keeping borrowing costs low. According to Reuters, the central bank, in its quarterly outlook report, projected that inflation would hover near its 2 per cent target over the next three years.

The Bank of Japan (BOJ) announced its decision to maintain ultra-low interest rates on Friday, with the objective of keeping borrowing costs low. According to Reuters, the central bank, in its quarterly outlook report, projected that inflation would hover near its 2 per cent target over the next three years. This decision indicates the BOJ's preparation to potentially increase borrowing costs later in the year. The BOJ has reaffirmed its stance to purchase government bonds at a monthly rate of approximately 6 trillion yen ($38.45 billion), following the guidance set in March. As expected, the central bank kept its short-term interest rate target within the range of 0-0.1 per cent, a decision made just a month earlier during its historic departure from a massive stimulus program. According to the board's projections, core consumer inflation is expected to reach 2.8 per cent for the fiscal year starting in April, gradually narrowing to 1.9 per cent in both fiscal years 2025 and 2026. The "core core" index, excluding fuel costs, is forecasted to rise to 1.9 per cent in fiscal years 2024 and 2025, before accelerating to 2.1 per cent in 2026. Market attention has turned to Governor Kazuo Ueda's remarks in the post-meeting press conference, particularly regarding the impact of the weakening yen on the timing of the next rate hike. The yen's recent depreciation against the dollar, worsened by reduced expectations of an imminent US interest rate cut, has prompted concerns among policymakers. Despite reassurances from the BOJ that it won't aggressively raise rates following the cessation of eight years of negative interest rates in March, pressure mounts on Ueda to address the currency's decline. Governor Ueda said that the possibility of further rate hikes remains contingent upon increased wage gains leading to broader price hikes by firms. This scenario could initiate a cycle of rising wages and prices. However, Tokyo's core inflation figures, released on Friday, fell below the BOJ's 2 per cent target for April, signalling uncertainty in the price outlook. Economists are divided on the timing of the BOJ's next rate hike, with some predicting action in the third quarter, while others foresee a potential move between October and December, or even later. (With inputs from Reuters)

BOJ projects inflation near 2 pc amidst yen's fall: Ready for a rate hike

As the Bank of Japan (BOJ) concludes its two-day policy meeting, analysts anticipate the central bank will leave its benchmark interest rate unchanged, indicating the prevailing consensus among economists. <o:p></o:p>

With the yen hovering near a 34-year low, investors are checking for indications of a shift towards a less dovish stance, particularly amid ongoing efforts to strengthen Japan's economic recovery. <o:p></o:p>

Despite calls for tighter monetary policy, Governor Kazuo Ueda is expected to maintain the short-term rate at 0 per cent to 0.1 per cent. <o:p></o:p>

The anticipated policy decision follows the BOJ's recent termination of its extensive monetary easing program.<o:p></o:p>

Addressing concerns surrounding the yen's depreciation, Japan's finance minister reiterated warnings against excessive currency movements during a parliamentary session.<o:p></o:p>

Shunichi Suzuki refrained from specifying potential policy actions but acknowledged the conducive environment for addressing currency fluctuations. <o:p></o:p>

Against the backdrop of heightened market scrutiny, analysts speculate on the BOJ's policy trajectory, particularly regarding inflation forecasts and bond-buying plans. <o:p></o:p>

With the yen weakening to 154.85 against the dollar, the BOJ is pressed with currency dynamics while attempting to ensure financial stability and economic resilience.<o:p></o:p>

While the BOJ is trying to improve financial conditions, analysts have warned against premature interpretations of Japan's monetary policy stance. <o:p></o:p>

Leveraged funds and asset managers have accumulated record short positions on the yen, indicating the market sentiment and potential vulnerabilities to abrupt shifts in currency dynamics. <o:p></o:p>

Moreover, the BOJ's bond-buying activities continue to influence market sentiment, with investors looking out for indications of adjustments to bond purchasing guidelines. <o:p></o:p>

The central bank's approach to bond purchases is viewed as a critical determinant of its broader normalisation strategy and its implications for monetary policy transmission.<o:p></o:p>

Regarding inflationary pressures and economic indicators, the BOJ faces growing expectations to revise its inflation forecasts for the current fiscal year and beyond. <o:p></o:p>

The recent surge in oil prices, along with positive outcomes from spring wage negotiations, brings out the need for a nuanced assessment of inflationary risks. <o:p></o:p>

With Governor Ueda highlighting the potential for interest rate adjustments in response to rising inflation, analysts remain vigilant over the BOJ's guidance and its implications for monetary policy normalisation. <o:p></o:p>

(With inputs from Bloomberg)<o:p></o:p>

As the Bank of Japan (BOJ) concludes its two-day policy meeting, analysts anticipate the central bank will leave its benchmark interest rate unchanged, indicating the prevailing consensus among economists.

As the Bank of Japan (BOJ) concludes its two-day policy meeting, analysts anticipate the central bank will leave its benchmark interest rate unchanged, indicating the prevailing consensus among economists. With the yen hovering near a 34-year low, investors are checking for indications of a shift towards a less dovish stance, particularly amid ongoing efforts to strengthen Japan's economic recovery. Despite calls for tighter monetary policy, Governor Kazuo Ueda is expected to maintain the short-term rate at 0 per cent to 0.1 per cent. The anticipated policy decision follows the BOJ's recent termination of its extensive monetary easing program. Addressing concerns surrounding the yen's depreciation, Japan's finance minister reiterated warnings against excessive currency movements during a parliamentary session. Shunichi Suzuki refrained from specifying potential policy actions but acknowledged the conducive environment for addressing currency fluctuations. Against the backdrop of heightened market scrutiny, analysts speculate on the BOJ's policy trajectory, particularly regarding inflation forecasts and bond-buying plans. With the yen weakening to 154.85 against the dollar, the BOJ is pressed with currency dynamics while attempting to ensure financial stability and economic resilience. While the BOJ is trying to improve financial conditions, analysts have warned against premature interpretations of Japan's monetary policy stance. Leveraged funds and asset managers have accumulated record short positions on the yen, indicating the market sentiment and potential vulnerabilities to abrupt shifts in currency dynamics. Moreover, the BOJ's bond-buying activities continue to influence market sentiment, with investors looking out for indications of adjustments to bond purchasing guidelines. The central bank's approach to bond purchases is viewed as a critical determinant of its broader normalisation strategy and its implications for monetary policy transmission. Regarding inflationary pressures and economic indicators, the BOJ faces growing expectations to revise its inflation forecasts for the current fiscal year and beyond. The recent surge in oil prices, along with positive outcomes from spring wage negotiations, brings out the need for a nuanced assessment of inflationary risks. With Governor Ueda highlighting the potential for interest rate adjustments in response to rising inflation, analysts remain vigilant over the BOJ's guidance and its implications for monetary policy normalisation. (With inputs from Bloomberg)

BOJ expected to maintain rates amid focus on yen, economic recovery

Governor Kazuo Ueda of the Bank of Japan (BOJ) assured that the central bank would not adjust its policy directly in response to currency fluctuations, while concerns continue to grow over the yen's weakness. <o:p></o:p>

Bloomberg News reported that Ueda's remarks come as market participants anticipate US inflation data that could possibly trigger further depreciation of the yen, prompting intervention from Japan's government. <o:p></o:p>

Despite the yen hovering near a 34-year low against the dollar, Ueda said ,"We won’t consider changing monetary policy at all to directly respond to moves in foreign exchange."<o:p></o:p>

While saying that the BOJ will continue to monitor the impact of the weak yen on the economy and inflation dynamics, Ueda noted the central bank's vigilance regarding currency movements. <o:p></o:p>

However, he clarified that any adjustments to monetary policy would be made with a broader economic perspective in mind. <o:p></o:p>

The BOJ's cautious approach is indicative of the complexities surrounding currency interventions and the need to balance various economic factors.<o:p></o:p>

While there are constant concerns over the yen's depreciation, Ueda said that currency interventions will fall under the purview of Japan's Ministry of Finance.<o:p></o:p>

Analysts speculate that continued yen weakness could prompt the BOJ to consider early rate hikes, especially if ministry interventions fail to influence market sentiment. <o:p></o:p>

Recent warnings from Japanese currency authorities against speculative trading mark repeated attempts by the government to stabilise the currency markets.<o:p></o:p>

During a parliamentary session, Ueda said that financial and currency markets will have to be monitored. <o:p></o:p>

(With inputs from Bloomberg)<o:p></o:p>

Governor Kazuo Ueda of the Bank of Japan (BOJ) assured that the central bank would not adjust its policy directly in response to currency fluctuations, while concerns continue to grow over the yen's weakness.

Governor Kazuo Ueda of the Bank of Japan (BOJ) assured that the central bank would not adjust its policy directly in response to currency fluctuations, while concerns continue to grow over the yen's weakness. Bloomberg News reported that Ueda's remarks come as market participants anticipate US inflation data that could possibly trigger further depreciation of the yen, prompting intervention from Japan's government. Despite the yen hovering near a 34-year low against the dollar, Ueda said ,"We won’t consider changing monetary policy at all to directly respond to moves in foreign exchange." While saying that the BOJ will continue to monitor the impact of the weak yen on the economy and inflation dynamics, Ueda noted the central bank's vigilance regarding currency movements. However, he clarified that any adjustments to monetary policy would be made with a broader economic perspective in mind. The BOJ's cautious approach is indicative of the complexities surrounding currency interventions and the need to balance various economic factors. While there are constant concerns over the yen's depreciation, Ueda said that currency interventions will fall under the purview of Japan's Ministry of Finance. Analysts speculate that continued yen weakness could prompt the BOJ to consider early rate hikes, especially if ministry interventions fail to influence market sentiment. Recent warnings from Japanese currency authorities against speculative trading mark repeated attempts by the government to stabilise the currency markets. During a parliamentary session, Ueda said that financial and currency markets will have to be monitored. (With inputs from Bloomberg)

BOJ governor affirms monetary policy while concerns loom over a weak yen

The Bank of Japan (BOJ) has terminated its 17-year-long policy of negative interest rates, marking a significant shift in the country's monetary strategy. <o:p></o:p>

This decision, unveiled after a two-day policy meeting, reflects the BOJ's confidence in Japan's evolving wage-price dynamics and its pursuit of sustainable economic growth. <o:p></o:p>

The move comes amidst rising wages and aims to foster a healthier economic landscape.<o:p></o:p>

The shift from negative rates<o:p></o:p>

According to media reports, the BOJ has shifted gears from its long-standing negative interest rate policy, setting a new target range of zero percent to 0.1 per cent for the overnight call rate. <o:p></o:p>

This move, coupled with the abandonment of the yield curve control program, highlights the central bank's resolve to normalise its monetary policy framework. <o:p></o:p>

The termination of these unconventional measures signals a return to a more conventional monetary policy approach, with short-term interest rates emerging as the primary policy instrument. <o:p></o:p>

Rationale behind the decision<o:p></o:p>

The decision to end negative rates and initiate a rate hike stems from the BOJ's assessment of Japan's evolving economic landscape. <o:p></o:p>

A Japan Times report noted that the central bank observed a robust wage-price cycle, fuelled by huge pay increases, which has bolstered its confidence in achieving the targeted 2 per cent price stability sustainably. <o:p></o:p>

Despite this optimistic outlook, BOJ Governor Kazuo Ueda hinted at a cautious approach, suggesting that rapid rate hikes are unlikely in the near term.<o:p></o:p>

Impact on financial markets<o:p></o:p>

While the termination of negative rates signifies a significant policy shift, financial markets reacted swiftly to the BOJ's announcement. <o:p></o:p>

The yen experienced a sharp decline against the dollar, breaching the ¥150 level for the first time in two weeks. <o:p></o:p>

Market analysts attribute this depreciation to the central bank's indication that further rate hikes are not imminent. <o:p></o:p>

Wage growth dynamics<o:p></o:p>

Japan's recent wage growth trajectory has played a pivotal role in shaping the BOJ's policy stance. <o:p></o:p>

Strong pay increases, particularly evident in this year's spring wage negotiations, have provided impetus for the central bank's decision to normalise the monetary policy. <o:p></o:p>

Major Japanese firms have recorded a 33-year high in average wage hikes, reflecting a positive shift in the wage-price dynamics. <o:p></o:p>

This trend, known as shuntō, has emerged as a crucial determinant for the BOJ in gauging the prospects of a virtuous cycle of wage and price hikes.<o:p></o:p>

Future monetary policy outlook<o:p></o:p>

Despite unwinding its ultra-loose monetary stimulus, the BOJ remains cautious about the economic landscape's future trajectory. <o:p></o:p>

While acknowledging the strong wage growth, Governor Ueda emphasised the central bank's readiness to adjust rates in line with inflationary trends and economic stability. <o:p></o:p>

However, with consumption still subdued and various external factors at play, including potential US Federal Reserve rate cuts, the BOJ maintains a prudent stance towards future rate hikes. <o:p></o:p>

Effective communication with the market and a nuanced approach to monetary policy remain paramount amidst evolving economic dynamics.<o:p></o:p>

The Bank of Japan (BOJ) has terminated its 17-year-long policy of negative interest rates, marking a significant shift in the country's monetary strategy. This decision, unveiled after a two-day policy meeting, reflects the BOJ's confidence in Japan's evolving wage-price dynamics and its pursuit of sustainable economic growth.

The Bank of Japan (BOJ) has terminated its 17-year-long policy of negative interest rates, marking a significant shift in the country's monetary strategy. This decision, unveiled after a two-day policy meeting, reflects the BOJ's confidence in Japan's evolving wage-price dynamics and its pursuit of sustainable economic growth. The move comes amidst rising wages and aims to foster a healthier economic landscape. The shift from negative rates According to media reports, the BOJ has shifted gears from its long-standing negative interest rate policy, setting a new target range of zero percent to 0.1 per cent for the overnight call rate. This move, coupled with the abandonment of the yield curve control program, highlights the central bank's resolve to normalise its monetary policy framework. The termination of these unconventional measures signals a return to a more conventional monetary policy approach, with short-term interest rates emerging as the primary policy instrument. Rationale behind the decision The decision to end negative rates and initiate a rate hike stems from the BOJ's assessment of Japan's evolving economic landscape. A Japan Times report noted that the central bank observed a robust wage-price cycle, fuelled by huge pay increases, which has bolstered its confidence in achieving the targeted 2 per cent price stability sustainably. Despite this optimistic outlook, BOJ Governor Kazuo Ueda hinted at a cautious approach, suggesting that rapid rate hikes are unlikely in the near term. Impact on financial markets While the termination of negative rates signifies a significant policy shift, financial markets reacted swiftly to the BOJ's announcement. The yen experienced a sharp decline against the dollar, breaching the ¥150 level for the first time in two weeks. Market analysts attribute this depreciation to the central bank's indication that further rate hikes are not imminent. Wage growth dynamics Japan's recent wage growth trajectory has played a pivotal role in shaping the BOJ's policy stance. Strong pay increases, particularly evident in this year's spring wage negotiations, have provided impetus for the central bank's decision to normalise the monetary policy. Major Japanese firms have recorded a 33-year high in average wage hikes, reflecting a positive shift in the wage-price dynamics. This trend, known as shuntō, has emerged as a crucial determinant for the BOJ in gauging the prospects of a virtuous cycle of wage and price hikes. Future monetary policy outlook Despite unwinding its ultra-loose monetary stimulus, the BOJ remains cautious about the economic landscape's future trajectory. While acknowledging the strong wage growth, Governor Ueda emphasised the central bank's readiness to adjust rates in line with inflationary trends and economic stability. However, with consumption still subdued and various external factors at play, including potential US Federal Reserve rate cuts, the BOJ maintains a prudent stance towards future rate hikes. Effective communication with the market and a nuanced approach to monetary policy remain paramount amidst evolving economic dynamics.

Japan ends 17-year stint of negative interest rates as BOJ initiates historic rate hike

Japan is gearing up for a second consecutive year of significant wage hikes, presenting an opportunity for the Bank of Japan (BOJ) to consider stepping back from a decade-long monetary stimulus. The substantial pay increases witnessed this year, the largest in over 30 years, are expected to continue into 2024.&nbsp;

According to Reuters, the move is seen as a pivotal shift away from deflation, with major companies such as Suntory Holdings, Meiji Yasuda Life Insurance, and Bic Camera announcing plans for substantial pay bumps. Takeshi Niinami, CEO of Suntory Holdings, sees this as a paradigm shift, stating, "What's going on is a big paradigm shift away from deflation and towards inflation."

The consistent pressure from Prime Minister Fumio Kishida on companies to increase pay and offset the impact of rising living costs is a driving force behind this trend. The back-to-back annual wage increases align with Kishida's efforts to ensure robust pay hikes and prevent economic stagnation.

With inflation surpassing the BOJ's 2 per cent target for over a year, companies are under unprecedented pressure to sustain wage growth. Rengo, Japan's largest trade union confederation, demands further pay hikes, with plans to ask for "5 per cent or higher" in the upcoming negotiations. UA Zensen, another major union, is set to demand a 6 per cent rise.

Analysts and economists foresee sustained wage growth in 2024, exceeding the levels witnessed this year. Atsushi Takeda, Chief Economist at Itochu Economic Research Institute, notes that a combination of inflation, a tight labour market, and healthy corporate profits will contribute to maintaining momentum for wage hikes. The ability of companies to pass on higher costs in their supply chains further supports this trend. However, the key challenge remains ensuring that wage increases extend to smaller firms and regional areas, as highlighted by a BOJ report in October.

The potential continuation of robust wage growth offers Prime Minister Kishida a tool to navigate economic challenges and rebuild public support. Kishida's measures include subsidies and tax incentives for companies implementing significant pay hikes, benefiting even loss-making small and medium-sized enterprises (SMEs).

These strategies aim to empower SMEs in negotiations and stimulate broader wage growth. Kishida's call for the business community to surpass this year's wage growth in 2024 reflects the urgency and commitment to this economic agenda.

For the Bank of Japan, sustained wage growth becomes a crucial factor in considering an exit from its controversial monetary stimulus. Market speculation suggests the BOJ could end negative interest rates around April, pending further clarity on wages. Clues may emerge from the BOJ's quarterly tankan business survey in December and wage talks between major business lobbies and unions in January. However, the ultimate test lies in whether wage hikes extend beyond major corporations to smaller firms and regional economies, ensuring a comprehensive and inclusive economic recovery.

(With inputs from Reuters)

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Japan is gearing up for a second consecutive year of significant wage hikes, presenting an opportunity for the Bank of Japan (BOJ) to consider stepping back from a decade-long monetary stimulus.

Japan is gearing up for a second consecutive year of significant wage hikes, presenting an opportunity for the Bank of Japan (BOJ) to consider stepping back from a decade-long monetary stimulus. The substantial pay increases witnessed this year, the largest in over 30 years, are expected to continue into 2024. According to Reuters, the move is seen as a pivotal shift away from deflation, with major companies such as Suntory Holdings, Meiji Yasuda Life Insurance, and Bic Camera announcing plans for substantial pay bumps. Takeshi Niinami, CEO of Suntory Holdings, sees this as a paradigm shift, stating, "What's going on is a big paradigm shift away from deflation and towards inflation." The consistent pressure from Prime Minister Fumio Kishida on companies to increase pay and offset the impact of rising living costs is a driving force behind this trend. The back-to-back annual wage increases align with Kishida's efforts to ensure robust pay hikes and prevent economic stagnation. With inflation surpassing the BOJ's 2 per cent target for over a year, companies are under unprecedented pressure to sustain wage growth. Rengo, Japan's largest trade union confederation, demands further pay hikes, with plans to ask for "5 per cent or higher" in the upcoming negotiations. UA Zensen, another major union, is set to demand a 6 per cent rise. Analysts and economists foresee sustained wage growth in 2024, exceeding the levels witnessed this year. Atsushi Takeda, Chief Economist at Itochu Economic Research Institute, notes that a combination of inflation, a tight labour market, and healthy corporate profits will contribute to maintaining momentum for wage hikes. The ability of companies to pass on higher costs in their supply chains further supports this trend. However, the key challenge remains ensuring that wage increases extend to smaller firms and regional areas, as highlighted by a BOJ report in October. The potential continuation of robust wage growth offers Prime Minister Kishida a tool to navigate economic challenges and rebuild public support. Kishida's measures include subsidies and tax incentives for companies implementing significant pay hikes, benefiting even loss-making small and medium-sized enterprises (SMEs). These strategies aim to empower SMEs in negotiations and stimulate broader wage growth. Kishida's call for the business community to surpass this year's wage growth in 2024 reflects the urgency and commitment to this economic agenda. For the Bank of Japan, sustained wage growth becomes a crucial factor in considering an exit from its controversial monetary stimulus. Market speculation suggests the BOJ could end negative interest rates around April, pending further clarity on wages. Clues may emerge from the BOJ's quarterly tankan business survey in December and wage talks between major business lobbies and unions in January. However, the ultimate test lies in whether wage hikes extend beyond major corporations to smaller firms and regional economies, ensuring a comprehensive and inclusive economic recovery. (With inputs from Reuters) WATCH WION LIVE HERE

Japan's wage boom paves the way for BOJ exit, boosts inflation battle

Japanese Prime Minister Fumio Kishida unveiled a comprehensive&nbsp;$113 billion&nbsp;economic package, aimed at controlling the effects of surging inflation.

The proposed package encompasses various strategies, including temporary cuts to income and residential taxes, along with subsidies intended to alleviate the burdens of escalating gasoline and utility bills.&nbsp;

According to Reuters, the government plans to compile a supplementary budget of 13.1 trillion yen for the ongoing fiscal year in order to&nbsp;finance a significant portion of the expenditure.&nbsp;

The prolonged period during which inflation has consistently exceeded the central bank's two per cent target has been taking a toll on consumer spending and casting a shadow on Japan's economic recovery.&nbsp;

The ever-increasing cost of living has played a pivotal role in driving down Kishida's approval ratings, putting immense pressure on him to alleviate the hardships faced by households. &nbsp;

While the prime minister acknowledges that economic growth remains strong, wage increases have been insufficient to counterbalance the surge in prices. As a solution, he envisions returning a portion of the expected increase in tax revenues generated by the robust economy back to households, effectively cushioning the impact of inflation.&nbsp;

The latest move comes close on heels of the Bank of Japan allowing 10-year government bond yields to rise above 1 per cent, in response to the yen's weakening over the previous 18 months.&nbsp;

(With inputs from Reuters)&nbsp;

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Japanese Prime Minister Fumio Kishida unveiled a comprehensive $113 billion economic package, aimed at controlling the effects of surging inflation. The proposed package encompasses various strategies, including temporary cuts to income and residential taxes, along with subsidies intended to alleviate the burdens of escalating gasoline and utility bills.

Japanese Prime Minister Fumio Kishida unveiled a comprehensive $113 billion economic package, aimed at controlling the effects of surging inflation. The proposed package encompasses various strategies, including temporary cuts to income and residential taxes, along with subsidies intended to alleviate the burdens of escalating gasoline and utility bills. According to Reuters, the government plans to compile a supplementary budget of 13.1 trillion yen for the ongoing fiscal year in order to finance a significant portion of the expenditure. The prolonged period during which inflation has consistently exceeded the central bank's two per cent target has been taking a toll on consumer spending and casting a shadow on Japan's economic recovery. The ever-increasing cost of living has played a pivotal role in driving down Kishida's approval ratings, putting immense pressure on him to alleviate the hardships faced by households. While the prime minister acknowledges that economic growth remains strong, wage increases have been insufficient to counterbalance the surge in prices. As a solution, he envisions returning a portion of the expected increase in tax revenues generated by the robust economy back to households, effectively cushioning the impact of inflation. The latest move comes close on heels of the Bank of Japan allowing 10-year government bond yields to rise above 1 per cent, in response to the yen's weakening over the previous 18 months. (With inputs from Reuters) WATCH WION LIVE HERE

Japan announces $113 bn package to counter inflation woes 

The Bank of Japan (BOJ) is planning to raise its inflation forecasts in January, Nikkei reported. The forecasts may show price growth close to its 2 per cent target in fiscal 2023 and 2024.&nbsp;Earlier this month, BOJ shook markets by widening its 10-year yield cap range. This move is officially aimed at straightening out bond market distortions but seen by some analysts as a prelude to the exit from its ultra-loose monetary easing.

Upgrades to the BOJ's inflation forecast would further fuel such speculation as Governor Haruhiko Kuroda has said the central bank could discuss the exit if achievement of its 2% inflation target in tandem with wage hikes comes into sight.

Nikkei, citing people familiar with discussions at the central bank, said that the proposed changes would show the core consumer price index rising around 3% in fiscal 2022, between 1.6% and 2% in fiscal 2023, and nearly 2% in fiscal 2024.

Previous forecasts were released in the month of October. They were around 2.9 %, 1.6% and 1.6%, respectively.

Japan's core consumer prices excluding fresh food items rose 3.7% in November, the highest since 1981, government data showed last week.

But Kuroda has dismissed the chance of a near-term interest rate hike, saying recent price rises were driven by one-off increases in raw material costs rather than strong demand.

The BOJ will release the latest quarterly growth and price outlook after its next policy meeting on Jan. 17-18.

(With inputs from agencies)

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The Bank of Japan (BOJ) is planning to raise its inflation forecasts in January, Nikkei reported. The forecasts may show price growth close to its 2 per cent target in fiscal 2023 and 2024.

The Bank of Japan (BOJ) is planning to raise its inflation forecasts in January, Nikkei reported. The forecasts may show price growth close to its 2 per cent target in fiscal 2023 and 2024. Earlier this month, BOJ shook markets by widening its 10-year yield cap range. This move is officially aimed at straightening out bond market distortions but seen by some analysts as a prelude to the exit from its ultra-loose monetary easing. Upgrades to the BOJ's inflation forecast would further fuel such speculation as Governor Haruhiko Kuroda has said the central bank could discuss the exit if achievement of its 2% inflation target in tandem with wage hikes comes into sight. Nikkei, citing people familiar with discussions at the central bank, said that the proposed changes would show the core consumer price index rising around 3% in fiscal 2022, between 1.6% and 2% in fiscal 2023, and nearly 2% in fiscal 2024. Previous forecasts were released in the month of October. They were around 2.9 %, 1.6% and 1.6%, respectively. Japan's core consumer prices excluding fresh food items rose 3.7% in November, the highest since 1981, government data showed last week. But Kuroda has dismissed the chance of a near-term interest rate hike, saying recent price rises were driven by one-off increases in raw material costs rather than strong demand. The BOJ will release the latest quarterly growth and price outlook after its next policy meeting on Jan. 17-18. (With inputs from agencies) You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

Bank of Japan may raise inflation forecasts: Report

The Bank of Japan in its policy statement on Tuesday shocked markets by expanding its target band for interest rates, causing the yen to rise, bond yields to go up and stock prices to fall.&nbsp;

In its statement, the central bank said it will now allow yields on 10-year government bonds to move up or down on the basis of 50 basis points instead of 25 basis points around its 0 per cent objective, Nikkei Asia reported.&nbsp;

The BoJ Governor Haruhiko Kuroda told reporters, "This is neither a tightening nor a step toward an exit. This is a tweak to the monetary policy operation." He added that the changes are done responding to the changes in the market. "We did this to support the economy and will explain it to market players as much as necessary."

<a href="https://www.wionews.com/business-economy/world-bank-slashes-chinas-growth-forecast-from-43-per-cent-to-27-per-cent-in-2022-544824">Also read |&nbsp;World Bank slashes China’s growth forecast from 4.3 per cent to 2.7 per cent for 2022</a>

Bank's board decided to keep its main monetary policies unchanged.

Amid the tweaking of monetary policies, the yen soared to a four-month high against the dollar. The policy also comes after a decline in the US interest rates and market policies.&nbsp;

The move sent the yen to 132 per dollar making its strongest level since August.&nbsp;

The bank added that the policies were modified in order to improve the market functioning in the Asian country, encouraging a smoother yield cure formation.&nbsp;

The yield curve allows the bank to purchase Japanese government bonds with yields of zero and shirt term rates of minus 0.1 per cent.&nbsp;

<a href="https://www.wionews.com/business-economy/japan-government-spent-more-than-40-billion-to-bolster-the-yen-in-october-530006">Also read |&nbsp;Japanese government spent more than $40 billion to bolster the yen in October</a>

The move also caused the benchmark Nikkei 225 average to fall y 2.5 per cent, raised the yen from a range of 137 to about 132 against the dollar, and spiked the yield in the 10-year JCB to 0.46 per cent.&nbsp;

Over the past several months, the pressure on the central bank to tighten the policy has decreased as the yield on the 10-year US Treasury has declined from 4.2 per cent to 3.4 per cent.&nbsp;

Japan's inflation is at a 40-year high with consumer prices increasing by 3.6 per cent in October which is far beyond BoJ's 2 per cent target.

(With inputs from agencies)

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The Bank of Japan in its policy statement on Tuesday shocked markets by expanding its target band for interest rates, causing the yen to rise, bond yields to go up and stock prices to fall.

The Bank of Japan in its policy statement on Tuesday shocked markets by expanding its target band for interest rates, causing the yen to rise, bond yields to go up and stock prices to fall. In its statement, the central bank said it will now allow yields on 10-year government bonds to move up or down on the basis of 50 basis points instead of 25 basis points around its 0 per cent objective, Nikkei Asia reported. The BoJ Governor Haruhiko Kuroda told reporters, "This is neither a tightening nor a step toward an exit. This is a tweak to the monetary policy operation." He added that the changes are done responding to the changes in the market. "We did this to support the economy and will explain it to market players as much as necessary." Also read | World Bank slashes China’s growth forecast from 4.3 per cent to 2.7 per cent for 2022 Bank's board decided to keep its main monetary policies unchanged. Amid the tweaking of monetary policies, the yen soared to a four-month high against the dollar. The policy also comes after a decline in the US interest rates and market policies. The move sent the yen to 132 per dollar making its strongest level since August. The bank added that the policies were modified in order to improve the market functioning in the Asian country, encouraging a smoother yield cure formation. The yield curve allows the bank to purchase Japanese government bonds with yields of zero and shirt term rates of minus 0.1 per cent. Also read | Japanese government spent more than $40 billion to bolster the yen in October The move also caused the benchmark Nikkei 225 average to fall y 2.5 per cent, raised the yen from a range of 137 to about 132 against the dollar, and spiked the yield in the 10-year JCB to 0.46 per cent. Over the past several months, the pressure on the central bank to tighten the policy has decreased as the yield on the 10-year US Treasury has declined from 4.2 per cent to 3.4 per cent. Japan's inflation is at a 40-year high with consumer prices increasing by 3.6 per cent in October which is far beyond BoJ's 2 per cent target. (With inputs from agencies) WATCH WION LIVE HERE

Japan's central bank shocks markets with yield policy change, yen strengthens  

Asian shares turned lower on Thursday after the US&nbsp;Federal Reserve cut interest rates as expected but signalled a higher bar to further policy easings.

Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.36 per cent.

Hong Kong shares shed 0.96 per cent, but Japan's Nikkei rose 1.01 per cent.

The yen rose from a seven-week low versus the dollar and held onto those gains after the Bank of Japan kept policy on hold, as expected, but signalled it could ease next month.

Central banks around the world have been loosening policy to counter the risks of low inflation and recession. Easier monetary policy has generally supported equities.

However, some analysts argue that a bond market rally has gone too far, saying yields have fallen too fast and curves flattened too much.

Others are worried about the growing amount of sovereign debt with negative yields.

"This is a small positive for share prices as long as there is no recession," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

"The only problem is a 25 basis-point cut was already expected, and the comments and dot-plot forecasts were not as dovish as the market hoped. I think the Fed will have to cut again. There are still some risks from the yield curve."

US&nbsp;stock futures fell 0.23 per cent in Asia on Thursday. The S&amp;P 500 reversed losses to end 0.03 per cent higher after Powell said he did not see an imminent recession or think the Fed will adopt negative rates.

The Fed cut interest rates for a second time this year to 1.75 per cent - 2.00 per cent in a 7-3 vote but signalled further cuts are unlikely as the labour market remains strong.

The rate cut was widely expected, but the split vote has raised some concern about predicting the future path of monetary policy.

So-called dot-plot forecasts from all 17 policymakers showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday's move.

The yield on benchmark 10-year Treasury notes rose to 1.8013 per cent, while the two-year yield rose to 1.7703 per cent.

The spread between two- and 10-year Treasury yields, the most commonly used measure of the yield curve, was near the lowest since September&nbsp;9.

The curve inverted on August&nbsp;14 for the first time since 2007 when long-term yields traded below short-term yields, a widely accepted indicator of a coming recession.

The Australian dollar fell 0.5 per cent to $0.6793 after data showed the nation's jobless rate rose slightly to 5.3 per cent in August, bolstering expectations for the central bank to cut rates.

The yen rose around 0.3 per cent to 108.14 per dollar.

The BOJ maintained its pledge to guide short-term interest rates at minus 0.1 per cent and the 10-year government bond yield around 0 per cent.

Investors will closely watch BOJ Governor Haruhiko Kuroda's post-decision press conference later on Thursday to gauge how he assesses risks to Japan's economic outlook.

The US&nbsp;crude futures rose 0.24 per cent to $58.25 per barrel.

Oil markets have stabilised after attacks on Saudi Arabia over the weekend triggered a supply shock and sent prices soaring, but the volatility is still a risk as Middle East tensions remain high.

Washington has blamed Iran for the attacks, a charge which Tehran denies.

The US&nbsp;Secretary of State Mike Pompeo has said the strike was "an act of war."

Sterling traded at 88.50 pence per euro, near its strongest level since May 30. The pound was little changed at $1.2467.

Investors are awaiting a Bank of England policy meeting later Thursday. The BOE is expected to keep rates unchanged, but uncertainty about how the UK will exit from the European Union has complicated the outlook for monetary policy.

Asian shares turned lower on Thursday after the US Federal Reserve cut interest rates as expected but signalled a higher bar to further policy easings. Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall.

Asian shares turned lower on Thursday after the US Federal Reserve cut interest rates as expected but signalled a higher bar to further policy easings. Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.36 per cent. Hong Kong shares shed 0.96 per cent, but Japan's Nikkei rose 1.01 per cent. The yen rose from a seven-week low versus the dollar and held onto those gains after the Bank of Japan kept policy on hold, as expected, but signalled it could ease next month. Central banks around the world have been loosening policy to counter the risks of low inflation and recession. Easier monetary policy has generally supported equities. However, some analysts argue that a bond market rally has gone too far, saying yields have fallen too fast and curves flattened too much. Others are worried about the growing amount of sovereign debt with negative yields. "This is a small positive for share prices as long as there is no recession," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney. "The only problem is a 25 basis-point cut was already expected, and the comments and dot-plot forecasts were not as dovish as the market hoped. I think the Fed will have to cut again. There are still some risks from the yield curve." US stock futures fell 0.23 per cent in Asia on Thursday. The S&P 500 reversed losses to end 0.03 per cent higher after Powell said he did not see an imminent recession or think the Fed will adopt negative rates. The Fed cut interest rates for a second time this year to 1.75 per cent - 2.00 per cent in a 7-3 vote but signalled further cuts are unlikely as the labour market remains strong. The rate cut was widely expected, but the split vote has raised some concern about predicting the future path of monetary policy. So-called dot-plot forecasts from all 17 policymakers showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday's move. The yield on benchmark 10-year Treasury notes rose to 1.8013 per cent, while the two-year yield rose to 1.7703 per cent. The spread between two- and 10-year Treasury yields, the most commonly used measure of the yield curve, was near the lowest since September 9. The curve inverted on August 14 for the first time since 2007 when long-term yields traded below short-term yields, a widely accepted indicator of a coming recession. The Australian dollar fell 0.5 per cent to $0.6793 after data showed the nation's jobless rate rose slightly to 5.3 per cent in August, bolstering expectations for the central bank to cut rates. The yen rose around 0.3 per cent to 108.14 per dollar. The BOJ maintained its pledge to guide short-term interest rates at minus 0.1 per cent and the 10-year government bond yield around 0 per cent. Investors will closely watch BOJ Governor Haruhiko Kuroda's post-decision press conference later on Thursday to gauge how he assesses risks to Japan's economic outlook. The US crude futures rose 0.24 per cent to $58.25 per barrel. Oil markets have stabilised after attacks on Saudi Arabia over the weekend triggered a supply shock and sent prices soaring, but the volatility is still a risk as Middle East tensions remain high. Washington has blamed Iran for the attacks, a charge which Tehran denies. The US Secretary of State Mike Pompeo has said the strike was "an act of war." Sterling traded at 88.50 pence per euro, near its strongest level since May 30. The pound was little changed at $1.2467. Investors are awaiting a Bank of England policy meeting later Thursday. The BOE is expected to keep rates unchanged, but uncertainty about how the UK will exit from the European Union has complicated the outlook for monetary policy.

Asian shares turn lower on guarded Fed, yen rises after BOJ

Bank of Japan Governor Haruhiko Kuroda said cutting interest rates further into negative territory is among the bank's policy options, according to an interview with the Nikkei newspaper published on Friday.

Cutting rates "further into the negative zone is always an option," the newspaper quoted him as saying in the interview, held on Thursday.

Kuroda said while Japan's economy was sustaining momentum to achieve the BOJ's 2 per cent&nbsp;inflation target, risks surrounding the overseas economy were heightening.

"There are various things we can do, such as combining various tools or enhancing them," Kuroda was quoted as saying on what the BOJ could do if it were to ease again.

But Kuroda also stressed that the BOJ must take into account the impact any policy change could have on Japan's banking system and financial market functions.

Life insurers and pension funds have seen the return on their investments decline significantly due to falling long-term yields, which could hurt consumer sentiment, he said.

Kuroda also said yields on super-long Japanese government bonds with maturities of 20 or 30 years have "fallen a bit too far."

Markets are rife with speculation the BOJ could ease policy as early as this month to fend off an unwelcome yen spike that could be caused by expected monetary easing steps by the US Federal Reserve and the European Central Bank.

But some BOJ policymakers are wary of ramping up stimulus due to the rising cost of prolonged easings, such as the strain years of ultra-low interest rates are inflicting on financial institutions

Bank of Japan Governor Haruhiko Kuroda said cutting interest rates further into negative territory is among the bank's policy options, according to an interview with the Nikkei newspaper published on Friday.

Bank of Japan Governor Haruhiko Kuroda said cutting interest rates further into negative territory is among the bank's policy options, according to an interview with the Nikkei newspaper published on Friday. Cutting rates "further into the negative zone is always an option," the newspaper quoted him as saying in the interview, held on Thursday. Kuroda said while Japan's economy was sustaining momentum to achieve the BOJ's 2 per cent inflation target, risks surrounding the overseas economy were heightening. "There are various things we can do, such as combining various tools or enhancing them," Kuroda was quoted as saying on what the BOJ could do if it were to ease again. But Kuroda also stressed that the BOJ must take into account the impact any policy change could have on Japan's banking system and financial market functions. Life insurers and pension funds have seen the return on their investments decline significantly due to falling long-term yields, which could hurt consumer sentiment, he said. Kuroda also said yields on super-long Japanese government bonds with maturities of 20 or 30 years have "fallen a bit too far." Markets are rife with speculation the BOJ could ease policy as early as this month to fend off an unwelcome yen spike that could be caused by expected monetary easing steps by the US Federal Reserve and the European Central Bank. But some BOJ policymakers are wary of ramping up stimulus due to the rising cost of prolonged easings, such as the strain years of ultra-low interest rates are inflicting on financial institutions

Bank of Japan's Kuroda says deepening negative rates is among options: Nikkei

Confidence in Japanese manufacturers is expected to worsen to zero in the next three months, a Reuters poll found, as Britain&#39;s vote to exit the European Union (EU) further clouded the outlook for Japan&#39;s export-reliant economy. 
 
The Reuters Tankan, which tracks the Bank of Japan&#39;s (BOJ) quarterly Tankan survey, also found the service sector&#39;s mood fell in July to levels last seen in April 2013 when the BOJ embarked on massive monetary stimulus to reflate the economy. 
 
The monthly poll of 534 big and mid-sized firms taken July 1-15, of which 266 responded, offered an early glimpse of Japanese business sentiment in the wake of the Brexit vote, which briefly prompted a sharp Yen gain to below 100 Yen versus the Dollar. 
 
The Reuters Tankan sentiment index for manufacturers was unchanged at 3 in July and was seen worsening to zero in October, dragged down by exporters of cars, electronics, steel and chemicals. 
 
The sentiment indexes subtract the percentage of companies saying conditions are poor from those saying conditions are good. A positive number means optimists outnumber pessimists. 
 
The service-sector index fell to 15 from 17 in June, and was seen unchanged in October, reflecting weak domestic demand. 
 
Bleak business sentiment should add to calls for policymakers to do more to revive a flagging economy, with the government eyeing a stimulus package of 10 trillion Yen ($94.62 billion) or more and the Bank of Japan under pressure to ease policy further. 
 
&quot;We cannot see the future, given the effects of a rapid Yen gain due to Britain&#39;s vote to leave EU,&quot; a manager at a chemicals firm said in the survey, which companies answer anonymously. 
 
&quot;Capital expenditures are being put off because of uncertainty over Europe caused by Britain&#39;s exit from the EU, as well as a slowdown in China&#39;s economy, and currency situations,&quot; a machinery-maker said. 
 
While the safe-haven Yen has fallen to about 105 since last week as global risk aversion abated, manufacturers reported concerns over another possible spike in the Yen because of uncertainty over the global economic outlook. 
 
Last week Prime Minister Shinzo Abe ordered compilation of an economic stimulus package by the end of this month to respond to weak private consumption and investment, and external risks. Speculation also lingers that the BOJ may ease again at its July 28-29 policy review. 
 
(Reuters)

Confidence in Japanese manufacturers, which was steady in July, was seen worsening to zero in October, says a Reuters poll

Confidence in Japanese manufacturers is expected to worsen to zero in the next three months, a Reuters poll found, as Britain's vote to exit the European Union (EU) further clouded the outlook for Japan's export-reliant economy. The Reuters Tankan, which tracks the Bank of Japan's (BOJ) quarterly Tankan survey, also found the service sector's mood fell in July to levels last seen in April 2013 when the BOJ embarked on massive monetary stimulus to reflate the economy. The monthly poll of 534 big and mid-sized firms taken July 1-15, of which 266 responded, offered an early glimpse of Japanese business sentiment in the wake of the Brexit vote, which briefly prompted a sharp Yen gain to below 100 Yen versus the Dollar. The Reuters Tankan sentiment index for manufacturers was unchanged at 3 in July and was seen worsening to zero in October, dragged down by exporters of cars, electronics, steel and chemicals. The sentiment indexes subtract the percentage of companies saying conditions are poor from those saying conditions are good. A positive number means optimists outnumber pessimists. The service-sector index fell to 15 from 17 in June, and was seen unchanged in October, reflecting weak domestic demand. Bleak business sentiment should add to calls for policymakers to do more to revive a flagging economy, with the government eyeing a stimulus package of 10 trillion Yen ($94.62 billion) or more and the Bank of Japan under pressure to ease policy further. "We cannot see the future, given the effects of a rapid Yen gain due to Britain's vote to leave EU," a manager at a chemicals firm said in the survey, which companies answer anonymously. "Capital expenditures are being put off because of uncertainty over Europe caused by Britain's exit from the EU, as well as a slowdown in China's economy, and currency situations," a machinery-maker said. While the safe-haven Yen has fallen to about 105 since last week as global risk aversion abated, manufacturers reported concerns over another possible spike in the Yen because of uncertainty over the global economic outlook. Last week Prime Minister Shinzo Abe ordered compilation of an economic stimulus package by the end of this month to respond to weak private consumption and investment, and external risks. Speculation also lingers that the BOJ may ease again at its July 28-29 policy review. (Reuters)

Japan's business mood falls as Brexit clouds economic outlook

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Japan's business mood falls as Brexit clouds economic outlook