Bank of Japan provides additional guidance

Japan’s interest rates will remain unchanged until the beginning of 2020 at the earliest, according to the BoJ’s updated guidance. For some time, the BoJ has maintained that its ultra-loose monetary policy would remain unchanged for an “extended period”; however, in April, the bank announced that it does not intend to increase interest rates until “at least through around spring 2020”. 

  • South Korea’s economy announced an unexpected contraction
  • The BoJ trimmed its growth predictions for 2019 and 2020.
  • Australia will hold a General Election on 18 May

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Japan’s interest rates will remain unchanged until the beginning of 2020 at the earliest, according to the Bank of Japan’s (BoJ’s) updated guidance. For some time, the BoJ has maintained that its ultra-loose monetary policy would remain unchanged for an “extended period”; however, in April, BoJ policymakers provided additional detail, announcing that they do not intend to increase interest rates until “at least through around spring 2020”. At the same time, the central bank trimmed its growth predictions for the domestic economy, cutting its forecast from 0.9% to 0.6% for this year, and from 0.9% to 0.8% next year.  

“Australia is one of only ten countries to hold an “AAA” rating with all three major ratings agencies”

Retail sales rallied in March, rising by 1% year on year, and the rate of unemployment edged slightly higher in March, climbing from 2.3% to 2.5%. Core inflation picked up during April to reach 1.3% year on year. However, industrial output dropped unexpectedly during March, falling at an annualised rate of 4.6%. The Nikkei 225 Index rose by 5% during April, and the Topix Index increased by 1.7%. Meanwhile, the TSE Second Section Index rose by 2%.

South Korea’s economy contracted during the first quarter of 2019, shrinking by 0.3% quarter on quarter. On an annualised basis, the country’s economy grew by 1.8%. The surprise contraction raised speculation that the country’s central bank might be forced to consider a cut in interest rates. Elsewhere, having fallen by 1.5% in the final quarter of 2018, exports posted a quarter-on-quarter decline of 2.6% in the first three months of 2019. The International Monetary Fund (IMF) expects South Korea’s economy to expand by 2.6% this year and 2.8% next year. South Korea’s rate of consumer price inflation slowed in March from 0.5% year on year in February to 0.4%. The Kospi Index rose by 2.9% over the month. 

Credit ratings agencies Standard & Poor’s (S&P) maintained its “AAA” rating for Australia, citing the country’s improving budget position, “sound” prospects for economic growth, and improving labour market conditions. The rating could come under pressure if “house prices fall sharply and increase risks to fiscal accounts, real economic growth, and financial sector stability”. Australia is one of only ten countries to hold an “AAA” rating with all three major ratings agencies (S&P, Moody’s, and Fitch). Australia will hold a General Election on 18 May. The ASX All Ordinaries Index rose by 2.5% during April.


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