Australia. The Monthly CPI Indicator rose 4.3% in the year to November, down from 4.9%yr in October and a recent peak of 8.4%yr in December 2022. The November print was a touch softer than Westpac’s forecast and the market’s median forecast of 4.4%yr. At face value the November Monthly CPI Indicator suggests that if there are any risks to our current December quarter CPI forecast of 0.8%qtr it is very slightly to the downside.
Release of Japan's disappointing wage growth data led markets to scale back expectations of an imminent rate hike by BoJ. The continued lag in wages growth behind inflation undermines the prospects of establishing a virtuous cycle of wages and prices, which is a prerequisite to a BoJ policy shift. Although a rate hike in April by BoJ remains a possibility, the foundation for such a move is increasingly uncertain given the latest wages data. This development has resulted a broad-based weakening of Japanese Yen, although the decline has been somewhat contained. Concurrently, Nikkei capitalized on this sentiment, reaching new 33-year highs following an upside breakout from a six-month trading range this week.
Japanese Yen continues its decline in today's subdued trading environment. This selloff gained momentum following the release of disappointing wages growth data, which has tempered expectations for an imminent monetary policy adjustment by BoJ in January. Despite this, April is still considered a more probable time for interest rate hike, heavily dependent on the outcomes of the upcoming Spring wage negotiations. BoJ Governor Kazuo Ueda has underscored the importance of widespread wage increases across businesses of all sizes as a critical factor in the central bank's decision-making process. There is still significant progress to be made before the central bank can shift its policy direction.