Asian Shares Slide, Yen Strong: BOJ Mulls Positive Rates

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Asia stock markets faced a poor performance on Monday, while the dollar was a matter of concern in the US amidst an upcoming inflation report. These data tell the story about either accelerating or delaying global interest rate adjustments. The strengthening yen was a bullish sign that the Bank of Japan might be thinking about ending its negative interest rates because of a fear of wage hikes during wage negotiations.

In the December quarter, the Japanese economy experienced a slight growth of 0.4%, according to a revised annualized rate, thereby dismissing recession suspicions.

The CPI is expected to grow by 0.4% in the month of February, and the annual rate will remain unchanged at 3.1%. Core inflation, measured at an increase of 0.3%, is a sign of annual rate, at which the consumer price index level will decrease to 3.7%. This is because the payroll data reported in February showed poor employment conditions. Some economists expect that the Fed will start to cut interest rates possibly in May, not in June as was previously thought.

Additionally, both the developed and the emerging market central banks are going to be on the same page, with the best estimates of reduction in rates at 1.28 and 1.9 respectively over the next twelve months.