Bank of Japan Analyzes CGPI for Monetary Policy Decisions

Summary

  • The Corporate Goods Price Index (CGPI) reading shows a 0.3% decrease, which goes against a market forecast predicting the same amount of increase, which was also observed in November.
  • The Bank of Japan views the wholesale price data as a critical factor in determining trend inflation and deciding the timing to retract ultra-loose monetary policy.

The data released on the Corporate Goods Price Index (CGPI) shows an unexpected drop by 0.3%, countering the market’s median prediction for the same amount of increase. This change follows a 0.3% uptick observed in the preceding month of November.

The Bank of Japan refers to the wholesale price data to get insights into the prevailing inflation trends. This data plays a cherished role in the bank’s decision making, especially when considering the timing to pull back on its ultra-loose monetary policy.

Implication on Trading

The variations in CGPI and the Bank of Japan’s monetary policy can lead to fluctuations in the forex market, possibly impacting currencies like the Japanese Yen.

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