In Japan, the central bank’s mission is becoming more complicated. After the failed communications in August, which caused major turbulence in the financial markets, Investors are questioning the way forward in terms of monetary policy, and the latest indicators from the archipelago are not likely to clarify them: In July, the unemployment rate was on the rise. At 2.7%, it is moving away from the minimum of 2.4% at the beginning of the year, a sign that the archipelago economy is not in a good mood.
At the same time, Tokyo's inflation, perceived as an early indicator of national price growth, sharply increased to +2.6% in August from 2.2% in July.
These numbers are challenging the Bank of Japan. On the one hand, it will be tempted to keep its rates unchanged due to the slowing labour market. At the same time, if inflation recovers in the coming months, rates will be prompted to rise again.
This is an unenviable situation that the Tokyo monetary authorities must manage when Prime Minister Kishida takes his leave.
While monetary policy remains uncertain, the outlook for Japan and its fragile currency remains good.
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