Japan’s Nikkei Drops as Markets Await Key U.S. Inflation Data 
RBNZ Cuts Interest Rates Again as Inflation Cools and Recovery Remains Fragile 
UK Raises Deposit Protection Limit to £120,000 to Strengthen Saver Confidence 
Gold Prices Steady as Markets Await Key U.S. Data and Expected Fed Rate Cut 
BOJ’s Noguchi Calls for Cautious, Gradual Interest Rate Hikes to Sustain Inflation Goals 
European Stocks Rise as Markets Await Key U.S. Inflation Data 
Asian Currencies Edge Higher as Markets Look to Fed Rate Cut; Rupee Steadies Near Record Lows 
Asian Markets Mixed as RBI Cuts Rates and BOJ Signals Possible Hike 
Dollar Slides to Five-Week Low as Asian Stocks Struggle and Markets Bet on Fed Rate Cut 
Singapore Maintains Steady Monetary Outlook as Positive Output Gap Persists into 2025 
BOJ Faces Pressure for Clarity, but Neutral Rate Estimates Likely to Stay Vague 
China Urged to Prioritize Economy Over Territorial Ambitions, Says Taiwan’s President Lai 
Oil Prices Rise as Ukraine Targets Russian Energy Infrastructure 
Japan has cleared a crucial threshold for officially declaring an end to long-term deflation, according to Economy Minister Ryosei Akazawa. This optimism could influence the Bank of Japan’s (BOJ) approach to future interest rate hikes.
Inflation has exceeded the BOJ’s 2% target for nearly three years, but the government has hesitated to declare deflation over, viewing it as a prolonged period of weak wage growth and subdued consumption. Akazawa stated that all four key indicators—the output gap, consumer price index, GDP deflator, and unit labor costs—have turned positive. Notably, Japan’s output gap turned positive in Q4 2024 for the first time in six quarters, signaling strong demand.
“We hope the BOJ closely communicates with the government and continues guiding policy appropriately to ensure sustainable inflation,” Akazawa said.
The BOJ raised interest rates to 0.5% in January after ending its decade-long stimulus, citing progress toward achieving stable 2% inflation. However, the government has remained cautious about officially declaring an end to deflation, as doing so might limit its ability to introduce further fiscal stimulus.
Some analysts suggest that announcing the end of deflation could boost political support ahead of Japan’s upper house election in July. Whether this declaration leads to further monetary tightening remains to be seen, but Japan’s economy appears to be on a solid recovery path.
