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Tokyo's core inflation eases; Nikkei soars to 34-year high
Tokyo's inflation decelerates, affirming BOJ's policy stance; Nikkei surges on tech stock rally
Core CPI in Tokyo slows to 2.1% in December, aligning with BOJ's predictions
Nikkei reaches its highest level since 1990, driven by technology stock gains
Fed officials Bostic and Bowman comment on the path of US inflation and future rate cuts
Tokyo inflation trends and BOJ's outlook
Tokyo's core consumer price index (CPI) for the Ku-area saw a year-on-year rise of 2.1% in December 2023, a deceleration from the 2.3% increase in November and in line with market expectations. This slowdown for the second consecutive month is consistent with the Bank of Japan's (BOJ) assessment that cost-push pressure on consumer prices is easing. This data further solidifies the likelihood of a policy hold at the BOJ's upcoming meeting. Concurrently, the yen strengthened following the BOJ's indication of reducing its monthly purchases of super-long government bonds.
Historic high for Japan's Nikkei index
Japan's benchmark Nikkei index closed at its highest level in around 34 years on Tuesday, driven primarily by a surge in technology stocks that mirrored gains in the US market. The 225-issue Nikkei Stock Average ended up 1.16% from Friday, marking its highest close since the asset price bubble in 1990. The rally highlights investor confidence in the technology sector and broader optimism in the Japanese market.
Fed officials on US inflation and monetary policy
In the US, Federal Reserve officials Raphael Bostic and Michelle Bowman provided insights into the current state of inflation and the anticipated monetary policy path. Bostic noted that inflation has decreased more than expected and is on track to reach the FOMC’s 2% target, but he does not foresee a rate cut until the third quarter. Bowman expressed support for eventual easing but remains cautious about the potential for inflation to surge. Wall Street analysts are divided over when the Fed will begin to slow its balance-sheet reduction, indicating ongoing uncertainty over the central bank's next moves.
