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Japan CPI 2.5% y-o-y in Apr-24

- Japan's CPI growth moderated to 2.5% year-on-year in April 2024, reflecting the lowest increase since January and indicating softer inflationary pressures compared to the recent average.
- Contextual economic indicators reveal a mixed landscape: while bank lending growth remains strong at 3.1%, the modest DCGPI increase and declining cash earnings suggest potential challenges ahead for consumer spending and overall economic momentum.

Peak PMI Pace Probably Passing

• The PMIs probably peaked in the spring, with the US’s jump beyond its peers in May setting it up for a more substantial drop during the summer.
• Residual seasonality from the pandemic-corrupted adjustment factors will likely exaggerate the US payback as part of a softening global story.
• A summer downturn should support the re-emergence of dovish debate in the US, where we still expect a September cut. However, global policy only looks a little tight.

By Philip Rush

Japan Unemployment Rate 2.6% (consensus 2.5%) in Mar-24

- Japan's unemployment rate for March 2024 remained at 2.6%, slightly higher than consensus estimates, indicating a surprisingly stable labour market.
- The Jobs to Applications Ratio for the same month increased to 1.28, strengthening the already favourable environment for job seekers amid more job openings than applicants.

Japan Policy Rate 0.0% (consensus 0.0%) in Apr-24

• The BOJ has maintained its policy rate at 0.0-0.1%, consistent with market expectations, reflecting ongoing economic recovery with moderate inflation, set against a backdrop of global economic uncertainty.
• Future interest rate decisions will be influenced by global economic conditions, domestic economic performance, inflation trends, and financial market stability, with a vigilant approach towards any necessary adjustments to maintain economic growth and price stability.
• The central bank projects that the economy will continue to grow modestly above its potential. It expects CPI inflation to stabilize around 2% by fiscal 2025 and 2026, supported by government measures and favourable financial conditions.