Boj To Achieve Inflation Target

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Boj To Achieve Inflation Target

Boj Plans To Achieve 2% Target For Inflation

The Central Bank of Japan wants to ensure that inflation remains at 2%. They are aiming to sustain inflation at 2% as that's what's best for the economy of Japan.

These comments from the BoJ governor have also raised the hopes for a rate hike in the near term. If we get another rate hike from the BoJ, it will push the Japanese Yen (JPY) higher.

Japan'S Cpi Jumped By 3.6%

In December, the CPI jumped by 3.6% during December which was higher than the 3% print in core CPI. According to Ueda, they want to ensure that the CPI remains above 2% on a sustainable basis.

These comments from Ueda come as the BoJ raised the rates just a few weeks ago. As of now, the interest rate (short-term) in Japan is at 0.5%, which is a 17-year high.

However, the one thing that is a problem for Japan's government is the difference between the core CPI and the overall CPI. After all, an increase in the prices of food and fuel comes at a high political cost.

In December, a 27% increase was seen in the prices of fresh vegetables. In fact, the price of cabbage almost doubled during that period. Meanwhile, the fuel costs also jumped by 10%, which was a big change.

So, while the BoJ is attempting to sustain the inflation near 2%, the government is also under pressure. According to experts, the prices are increasing due to weaker Yen against other currencies.

However, subsequent rate hikes could help the JPY to advance against other currencies. A direct result of that would be lower import costs which will also be helpful for the government.

In fact, the BoJ is highly likely to go ahead with another rate hike as they wouldn't want the inflation to get too high! Over all, the Japanese Yen is expected to gain strength during the upcoming quarters of 2025.

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