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On July 23, UBS investment bank economists stated in a report that UK inflation, after slowing in June, is expected to accelerate and could peak at 3.3% in November. The economists said that utility bills are expected to rise in July, which could push the year-on-year overall inflation rate up to as high as 2.9% from 2.6% in June. "We expect food and goods inflation to intensify by the end of the year as higher input costs, particularly energy and fertilizer, are gradually passed on to consumers," they said, adding that the escalating conflict in the Middle East increases the risk of rising inflation.On July 23, UBS Investment Bank economists stated in a report that the likelihood of a Bank of England interest rate hike in the coming months has decreased. These economists said that sluggish UK economic growth and a weak labor market have reduced the necessity for a rate hike. "The Bank of England can mitigate the risk of a second-round effect by maintaining interest rates at their current restrained levels for a longer period without further rate increases." However, they noted that given rising oil prices and the preference of some Bank of England members for a rate hike, the possibility cannot be ruled out.Ukrainian President Zelensky: Representatives from Ukraine and the United States may meet in the United States in the coming days.Total Energy CEO: We understand that the latest EU sanctions agreement may allow us to sell Russian liquefied natural gas to non-EU countries next year, and we look forward to reading the final text.Ukrainian President Volodymyr Zelenskyy has proposed that former Ukrainian Prime Minister Sviridenko serve as Ukraines special envoy to the United States.

As BoJ Udea Mentions the Appropriateness of Current Monetary Policy, EUR/JPY Exhibits a V-Shaped Movement

Daniel Rogers

Feb 24, 2023 14:30

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When Kazuo Ueda, the nominee for Governor of the Bank of Japan (BoJ), addresses the Japanese parliament, the EUR/JPY currency pair exhibits a V-shaped movement. The commentary of Haruhiko Kuroda's successor as Governor of the Bank of Japan has increased the volatility of the Japanese Yen.

 

As he describes the current monetary policy as appropriate and necessary to sustain 2% inflation, BoJ Ueda's speech appears more diplomatic. Moreover, he stated that rising import prices are the cause of Japan's rising inflation. Domestic demand is still insufficient, but the central bank is attempting to achieve pre-pandemic growth rates. The neighborhood has descended into lunacy as a result of his speech's absence of Yield conversion control (YCC) discussions.

 

Despite current discussions about the expansion of the YCC, the economic outlook for the Japanese Yen is positive, as the Bank of Japan is working to increase labor costs, which will confidently support a revival in overall demand.

 

Nordea economists continue to be optimistic about the Japanese Yen: "We remain fairly sanguine on JPY due to our expectations of a change in Bank of Japan monetary policy later this year." According to a note from Nordea, the time is ripe for a normalization of the Bank of Japan's stimulative monetary policy, "with inflation reaching its highest level in decades and a prognosis for higher wage growth."

 

Despite the easing of inflationary pressures, investors are concerned that the normalization of the Eurozone economy will take a significant amount of time. In order to maintain a ceiling on the price index, the European Central Bank (ECB) is anticipated to continue raising interest rates.


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