The yen's fresh slide to a 34-year low complicates the Bank of Japan's deliberations on the timing of a next interest rate hike, as a resulting rise in import costs pushes up inflation but also hurts already weak consumption and the broader economy.
TOKYO, April 11 - The yen's fresh slide to a 34-year low complicates the Bank of Japan's deliberations on the timing of a next interest rate hike, as a resulting rise in import costs pushes up inflation but also hurts already weak consumption and the broader economy.
But the central bank is also likely to cut this year's economic growth forecast in the fresh quarterly projections, due in part to sluggish consumption and factory output, they said. "Unless the yen's fall become very rapid, the chance of the BOJ hiking rates by summer is very low," said Atago, chief economist at Rakuten Securities Economic Research Institute.The weak yen is a mixed blessing for the economy. While giving a boost to exports, the yen's fall would hit households and smaller retailers by inflating the cost of fuel, food and raw material imports.
The signs have been mixed so far. Consumption has lacked momentum as rising living costs hit households, which may discourage firms from pushing up prices further.that smaller firms may hike wages by as much as last year or even more. But actual data on smaller firms' pay won't be available until later this year, analysts say.
While the market's favourite projection on the rate hike timing is in October-December, some analysts are betting on the chance of action in July after Ueda's recent
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