KUALA LUMPUR, Nov 19 (Bernama) -- Bursa Malaysia gave up earlier gains to end mixed today, amid a higher regional market showing, as property, construction, and healthcare counters attracted buying interests, while plantation, banking, and telecommunication stocks saw some profit-taking, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.70 points to close at 1,602.34 from yesterday’s close of 1,604.04. The benchmark index, which opened 0.86 of-a-point lower at 1,603.18, moved between 1,601.02 and 1,608.88 during the trading session. However, the broader market was mixed to higher, with gainers leading decliners by 565 to 438 while 502 counters remained unchanged, 961 untraded, and 14 suspended. Turnover narrowed to 2.83 billion units valued at RM2.08 billion versus 2.96 billion units valued at RM2.23 billion yesterday. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index remained range-bound and it required a dec
Japan's Core Inflation Rises, But Demand-Driven Growth Falls Below 2%, Complicating BOJ's Rate Decisions
Japan's core inflation accelerated for the third consecutive month in July, with the nationwide core consumer price index (CPI) excluding fresh food items rising 2.7% year-on-year, slightly above the 2.6% increase in June. This marks the 28th straight month that inflation has remained at or above the Bank of Japan's (BOJ) 2% target. However, the slowdown in demand-driven price growth, reflected in the "core core" index, which excludes both fresh food and energy costs, dropped to 1.9%, complicating the BOJ's decision-making process regarding further interest rate hikes.
Key Takeaways:
Inflation Dynamics and Central Bank Challenges: The core CPI's increase is largely attributed to the phasing out of government subsidies that had been keeping household utility bills lower. However, the slowdown in the "core core" inflation suggests that demand-driven price pressures are easing. This presents a challenge for the BOJ as it balances the need to sustain inflation above its 2% target with the reality of weakening demand-driven growth.
BOJ's Tightening Stance Under Scrutiny: The BOJ surprised markets in July by raising interest rates to a 15-year high, signaling its readiness to continue tightening monetary policy if inflation continues on a sustainable path towards the 2% target. However, with the "core core" index slipping below 2%, the central bank's next steps are less certain, especially given the yen's recent rebound and the potential for slowing inflation due to lower import costs.
Market Reactions and Future Outlook: The BOJ's hawkish tone has had significant market repercussions, with the yen strengthening and Tokyo stocks experiencing a sharp sell-off. Governor Kazuo Ueda, while reaffirming the BOJ's readiness to raise rates again if needed, also emphasized the importance of closely monitoring market developments given the current financial instability. With Japan's economy showing stronger-than-expected growth in the second quarter, there is growing speculation that the BOJ might raise borrowing costs again by the end of the year, as indicated by a recent Reuters poll where 57% of economists supported this view.
As Japan navigates the complexities of its inflation dynamics, the BOJ's cautious approach to monetary policy will likely be influenced by upcoming economic data and market conditions, keeping investors and economists closely watching for further signals.
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