Weak Japan growth muddies waters for BoJ rate hike
The weaker-than-expected GDP came after capital expenditure fell and missed market expectations.
Japan's economic growth unexpectedly slowed in the second quarter, official data revealed on Monday, posing challenges for the central bank's plans to raise interest rates. Gross domestic product (GDP) expanded 0.3% on a month-to-month basis in April-June, a decline from 0.5% growth in the previous quarter. Annualized, the economy grew 1.1%, falling short of expectations of 2.0% and 1.9% for the January-March period.
The weaker-than-anticipated GDP growth comes after capital expenditure contracted and private consumption remained flat, missing forecasts for an increase. The government's fiscal policies, which have been expanded to support voters, may also be contributing to higher energy prices and a weaker yen. The yen has lost about half of its gains following the US and Japan's joint intervention last month.
The central bank's efforts to combat the weaker currency could potentially lift the yen, but a rate hike now appears less likely, as indicated by market expectations.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Japan: BoJ path questioned on weak demand – Societe Generale fxstreet.com
- Weak Japan growth muddies waters for BoJ rate hike freemalaysiatoday.com
