BOJ hikes interest rates by 15 bps; to halve bond purchases by 2026
Investing.com– The Bank of Japan raised interest rates by 15 basis points on Wednesday and said it will gradually halve its pace of monthly bond purchases by 2026 as it winds down its ultra-dovish policy and quantitative easing measures.
The BOJ hiked its benchmark short-term interest rate by 15 basis points to a range of 0.1% to 0.25%. Market expectations were split between a hold and a potential hike of 10-15 basis points.
The central bank said it will reduce its pace of Japanese Government Bond purchases to 3 trillion yen ($19.59 billion) from its current pace of 6 trillion yen by early-2026, in line with general consensus. The BOJ said it will reduce its pace of JGB buying by 400 billion yen each quarter.
The BOJ’s move to reduce its QE measures was mostly telegraphed by the bank during its June meeting.
BOJ members were seen lowering their outlook for economic growth and inflation in the near-term. A median of BOJ member forecasts for real gross domestic product in fiscal 2024 to 0.6% from 0.8%, and while the outlook for core consumer price index inflation fell to 2.5% from 2.8% for the year.
Still, BOJ members were seen slightly hiking their outlook for core CPI in 2025, to 2.1% from 1.9%.
The Japanese yen weakened slightly after the decision, with the USDJPY pair- which gauges the amount of yen needed to buy one dollar- rising 0.3%. Weakness in the yen came as some traders were disappointed with the BOJ’s extended timeline in winding down its QE measures, as well as its soft near-term outlook for the Japanese economy.
Wednesday’s rate hike comes amid some improvements in Japanese inflation over the past two months, especially as consumer spending improved on stronger wages. This trend furthered the central bank’s forecast that inflation will reach its 2% annual target sustainably, and that monetary conditions will have to tighten accordingly.
This forecast had driven the BOJ’s first rate hike in 17 years in March, where it brought rates into positive territory after nearly a decade of ultra-loose policy.
Other data released on Wednesday showed some improvement in Japan’s economy, with retail sales rising more than expected in June, while industrial production shrank less than expected.
Still, the Japanese economy was nursing a sharp contraction in the first quarter of 2024, which raised doubts over just how much headroom the BOJ has to tighten policy further.
Mt. Gox just moved $3B in Bitcoin — Here’s why the price barely blipped
Crypto analysts say Mt. Gox holders are more likely committed to hodling, and the market thinks so, too.
Gold prices rise past $2,400 with Fed, Middle East tensions in focus
Investing.com-- Gold prices rose in Asian trade on Wednesday, encouraged by a softer dollar as traders awaited more cues on interest rate cuts from the...
‘Magnificent seven’ stocks shed $2.6T in lead-up to busy earnings week
The world’s best-performing tech stocks have bled an average $125 billion market cap per day for the past 20 days while crypto market cap has...
UAE residents can now trade crypto directly with their bank accounts
The new integration enables the direct conversion of UAE dirhams into Bitcoin and Ether using M2’s spot market.
SEC likely still believes SOL is a security, say crypto execs
Many crypto observers may be “overreading” the security regulator’s latest filing for its Binance lawsuit, meaning Solana and other tokens may not be off the...
Spot Ethereum ETFs flip positive after $34M inflow on July 30
Daily flow into Ether ETFs has turned up positive for the first time since launch day, reversing a trend of outflows that saw $547 million...
$99 AI necklace puts a ‘friend’ around your neck
The tech entrepreneur who built a COVID-19 tracker as a teen in 2020 has now launched a new AI-powered necklace to combat loneliness. Some say...
Bitcoiners tip ‘September breakout’ but cast doubt on near-term $100K
Bitcoin is set to move upward in September, but traders are now less confident it’ll break the $100,000 mark before the end of the year.
Samsung flags strong AI demand as profit soars on higher chip prices
By Joyce Lee and Heekyong Yang SEOUL (Reuters) -Samsung Electronics forecasted robust artificial intelligence-driven demand for chips in the second half of this year, as...