As the Bank of Japan moves away from negative interest rates after eight years, economies worldwide tackle inflation adjustments, with a keen eye on the Bank of England’s upcoming rate decision and global services inflation.
The Bank of Japan recently raised its short-term policy rate from -0.1% to between zero and 0.1%, marking the end of eight years of negative rates and a significant shift towards economic normalisation. The decision comes as Japan’s economy shows signs of recovery, with a recent wage increase of 5.28% by major employers contributing to optimism among policymakers. Governor Kazuo Ueda’s post-meeting conference is awaited for insights into future rate hike plans.
In the UK, mortgage holders and house hunters are awaiting fresh inflation data ahead of the Bank of England’s interest rate decision. The consumer price index for February is expected to decrease to 3.5% year-on-year from 4%, potentially nearing the BOE’s 2% target. Speculation around a possible rate cut is causing fluctuations in mortgage rates and impacting the housing market’s activity and consumer spending.
Economists are closely monitoring services inflation globally, particularly in the US, eurozone, and UK, with concerns about sustainability at high levels. Academic research offers differing views on the impact of energy prices on services inflation, hinting at potential fluctuations in the near future. Central banks remain focused on monitoring services prices and wage dynamics to ensure price level stability amidst varying inflation landscapes.
