The Japanese yen has strengthened for a second consecutive session, bolstered by strong core inflation data indicating a potential for Bank of Japan rate hikes. May's core consumer price index saw a year-on-year increase of 3.6%, the highest in over two years, signaling sustained inflationary pressures. BoJ Governor Kazuo Ueda confirmed the bank's commitment to its 2% inflation target, which has influenced market expectations for a potential rate increase in July. Despite this, uncertainties surrounding economic conditions and trade may limit the yen’s overall appreciation.
The Japanese yen extended gains as inflation data raised expectations of Bank of Japan rate hikes, supported by safe-haven demand from global trade tensions.
Tokyo's core consumer price index rose 3.6% year-on-year in May, its fastest pace in over two years, indicating persistent inflationary pressures.
BoJ Governor Kazuo Ueda reaffirmed the bank's commitment to a 2% inflation target, which has bolstered market expectations for rate increases.
Although economic difficulties could limit tightening pace, persistent inflation and wage growth may lead to further monetary policy adjustments that will support the yen.
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