The Bank of Japan (BoJ) recently decided to keep interest rates unchanged.

The yen is steady at around 154 yen per dollar. This has raised concerns among investors that Japanese authorities may intervene in the foreign exchange market once again. Atsushi Mimura, Japan's senior currency official, commented briefly that excessive yen volatility might necessitate further intervention, though any actions would need to be carefully executed.

Domestic economic data revealed a slight rise in inflation, leading to expectations that the BoJ might continue to hold interest rates steady in the near term. At its latest meeting, the BoJ held its interest rate at 0.25%, aligning with market expectations. This decision was made ahead of the U.S. presidential election. Governor Kazuo Ueda highlighted the increasing uncertainty surrounding the global economy, emphasizing the need to assess additional risks following a rate cut in July. However, BoJ policymakers continue to express a commitment to raising interest rates if economic data and inflation align with projections. It is forecasted that core inflation could reach 2.5% in 2024, with inflation around 1.9% in both 2025 and 2026. For GDP growth, the central bank projects 0.6% growth in 2024 and 1.1% in 2025.

Tokyo’s core inflation rose by 1.8% year-on-year in October, marking a deceleration in inflation for the second consecutive month, serving as an indicator for national inflation trends. Investors expect Japan’s declining inflation rate and political uncertainties to keep the BoJ’s interest rate outlook ambiguous. BoJ board member Seiji Adachi also underscored the need for future rate hikes, though not imminently, as global economic uncertainty and domestic wage growth remain key considerations for future policy adjustments.

Japan's unemployment rate slightly decreased to 2.4% in September, with the number of unemployed down by 40,000 to 1.68 million, the lowest in 20 months. Meanwhile, employment trends showed continued decline, with a drop of over 90,000 jobs, leaving 67.82 million employed. At the same time, the job openings-to-applicants ratio rose slightly to 1.24, highlighting a reduction in available jobs compared to the previous year.

Japan’s manufacturing PMI was revised up to 49.2 in October, marking the fourth consecutive month of contraction in manufacturing activity and the steepest contraction since March. New orders continued to decline for the 17th consecutive month, with export orders decreasing at their fastest rate in seven months, largely due to weakening demand. While employment levels have remained steady, production costs have not increased significantly, with producer price inflation showing only a slight rise. Business confidence remains positive, though concerns about recovery from current economic challenges persist.