Japan's plan to end utility subsidies may raise inflation by 0.5-0.75% in summer, affecting BOJ's interest rate decision.
Japan's plan to end utility subsidies is expected to push inflation towards 3% during summer, potentially complicating the Bank of Japan's (BOJ) thinking on the path of interest rate hikes. The government plans to end subsidies on electricity and gas charges at the end of May, while keeping its gasoline measures in place for now. Economists predict this move will increase the nation's key inflation gauge by half a percentage point between May and July, and an additional 0.25 percentage point due to an increase in renewable energy-related levies.
March 28, 2024
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