US PCE (Personal Consumption Expenditures) Price Index.
A new fiscal year has begun.
A Koomekko who might blurt out “Happy New Year” is here.
Now, today's news you may be curious about.
“The core PCE price index growth rate is approaching the FOMC’s year-end projection”
Below is a citation from Yahoo News
This is an article by Nobuhide Kiuchi (Nomura Research Institute, Executive Economist).
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The U.S. Federal Reserve Board (FRB) had been watching the timing of rate cuts from the perspective of the financial markets, and the U.S. March PCE (personal consumption expenditures) price index was released on Friday, March 29. As the market expected, there was no big movement in the dollar/yen rate around the 151 yen level per dollar. Japanese authorities, taking this indicator into account, would have been ready to intervene in the New York market to sell dollars and buy yen if the dollar/yen rate had exceeded 152 yen per dollar and yen depreciation accelerated, but that was postponed.
February’s PCE price index rose by +0.3% month-on-month, lower than the previous month’s +0.4%. Year-on-year it was +2.5%, higher than the prior month’s +2.4%, but as expected. The core index, excluding energy and food, also rose as expected by +2.8% year-on-year, slowing from +2.9% in January.
In the March FOMC, participants maintained three rate cuts for this year. The projected median for the year-end PCE core index remains +2.6%. It’s a distance of just -0.2 percentage points for the core index to reach that level. Although inflation has been easing only gradually around now, the probability of reaching this forecast by year-end remains high. In that case, the Fed would likely maintain a stance to implement three rate cuts within the year.
In response to this indicator, Chair Powell stated that it “almost matched our expectations.” On the other hand, given a strong U.S. economy, there is a view that there is no need to hurry with rate cuts. This suggests a lower likelihood of a rate cut at the next FOMC on May 1, but the prospects for a rate cut at the June 12 FOMC are relatively high. However, there are cautious voices within the Fed about early rate cuts, so a unanimous decision to cut is not guaranteed.
Will the Japanese government intervene in the FX market around 152 or 153 yen per dollar?
The next major focus for assessing the Fed’s policy stance and exchange trends is the U.S. March employment data. In a press conference after the previous FOMC, Chair Powell indicated that if unemployment unexpectedly rose, there could be a rate cut. Even if the current inflation pace doesn’t slow as expected, if the labor market softens, inflation risks over the longer term would be deemed controllable, justifying a rate cut.
Therefore, if March employment data comes in weaker than expected, the probability of a June rate cut would rise further. Conversely, if employment data comes in stronger, expectations for June rate cuts would weaken, potentially supporting a dollar rise and yen depreciation in the FX market.
Finance Minister Shunichi Suematsu said on the 29th that the yen’s depreciation movement “feels strongly opposite in direction.” Even though the Bank of Japan has moved to end the negative rate policy, the yen’s depreciation in the FX market is hard to reconcile with that, and is likely due to speculative movements.
This may seem like a rash argument, but it can be interpreted as a statement clearly indicating that the government’s timing for FX intervention is approaching (omitted).
If the U.S. March employment data or other factors push the yen lower, the government is expected to intervene by selling dollars and buying yen around 152–153 yen per dollar. As a result, at least temporarily, the dollar/yen rate could move toward the 150 yen per dollar level or lower yen appreciation may occur.
...that’s how it is.
Today is April 1.
I hope today’s unfavorable news is just an April Fools’ joke (;'‿`)
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