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July 31st - The Bank of Japan (BOJ) kept interest rates unchanged on Friday, with only one voice supporting a rate hike. Meanwhile, in its monetary policy outlook report, the BOJ lowered its inflation forecast for the current fiscal year. Fridays decision came amid escalating tensions in the Middle East. For oil-dependent Japan, inflation concerns remain. However, the central bank plans to further monitor the situation, especially after the June rate hike. On Thursday, Japan intervened in the foreign exchange market by buying yen and dollars, while US authorities also conducted currency checks. Now, all eyes are on BOJ Governor Kazuo Uedas afternoon press conference, hoping to glean clues about the central banks future policy direction and any commentary on the intervention.On July 31, at a press conference held today, the China Council for the Promotion of International Trade (CCPIT), representing the Chinese business community, responded to the EUs efforts to accelerate the draft amendments to the Cybersecurity Act and the EUs Industrial Accelerator Act. We urge the EU to fully consider the opinions of the global business community in the subsequent legislative process and to prudently assess the impact of the relevant legislation on Sino-EU business cooperation, the EUs own industrial development, and the stability of the global supply chain. We call on the EU to adhere to the principles of technological neutrality and performance orientation, to delete or substantially modify rules and arrangements that are country-specific or discriminatory, and to effectively safeguard the common interests of existing investments and the common interests of future Sino-EU cooperation. Chinese enterprises are important partners in Europes digital transformation and industrial upgrading. The Chinese business community is willing to continue to strengthen cooperation with the EU to jointly promote cybersecurity governance and green economic development, maintain an open, fair, and non-discriminatory market environment, and jointly ensure the stability and smooth operation of global industrial and supply chains.On July 31, the Bank of Japan (BOJ) kept its policy rate at 1%, in line with expectations. Last month, the bank had already raised its benchmark interest rate to its highest level since 1995. BOJ policy board member Hajime Takada dissented and supported a 25-basis-point rate hike, arguing that the situation had entered a new phase and the BOJ needed to adopt a flexible approach to address upside risks to prices and changes in the overseas financial environment. The BOJ stated that it will continue to raise interest rates based on economic and price developments and financial conditions. Underlying inflation is approaching 2%, financial conditions remain accommodative, and both significant downside risks to economic activity and significant upside risks to prices have decreased. In its latest economic forecasts, the BOJ lowered its core CPI forecast for fiscal year 2026 from 2.8% to 2.5%, while raising its GDP growth forecast for fiscal year 2026 from 0.5% to 0.6%.Bank of Japan: Will assess the impact of the situation in the Middle East on the timing and pace of interest rate hikes.Bank of Japan: From the perspective of supporting Japans growth-oriented investment expansion, it is crucial to achieve price stability through the appropriate implementation of monetary policy.

Despite the fact that Eurozone interest rates are anticipated to peak sooner, the EUR/GBP looks to have breached over 0.8630

Daniel Rogers

Dec 07, 2022 15:12

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The EUR/GBP pair has had a stronger recovery from 0.8580 during the Asian session, approaching the pivotal 0.8630 level. Despite the European Central Bank (ECB) being close to reaching an interest rate high, there has been strong demand for Euro bulls. Thus, the monetary policy meeting scheduled for next week will be of utmost significance.

 

The cross is attempting to break strongly above the significant barrier of 0.8630 for the fourth time this week. The hawkish remarks made by ECB policymakers are holding back the euro bulls.

 

"There will be another rate hike," said Constantinos Herodotou, governor of the Central Bank of Cyprus, "but we are very near to neutral." The European Central Bank's chief economist, Phillip Lane, is unsure as to whether the inflation peak has already occurred or will take place in 2019. He stated that although "much has already been done," he does not rule out more rate increases.

 

Investors are currently looking forward to Christine Lagarde's speech, which will be revealed on Thursday. The ECB President is likely to lower her inflation projection in her future statement in light of the poor retail sales numbers.

 

In contrast to expectations for a 1.7% loss, this week's Eurozone retail sales numbers showed a 1.8% decline. Aside from that, annual economic data contraction came in at 2.7% as opposed to the 2.6% consensus expectation. A decline in household demand demonstrates the effectiveness of the European Central Bank's (ECB) policy tightening initiatives. To reach their sales targets, firms could feel pressured to lower the prices of their products and services.

 

The United Kingdom's deteriorating food crisis, brought on by growing costs and a labor shortfall, has had an impact on the Pound Sterling. According to Minette Batters, president of the National Farmers Union, "the government and the entire supply chain must act swiftly." The Financial Times stated that "tomorrow might be too late." The economy already faces rising food inflation, and the issue with the supply of food will make matters worse.


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