Today's top news comes out of Asia: Japan’s central bank held interest rates steady on Friday, as expected, after a landmark move last month to raise the policy rate to 0.75%—the highest in three decades. Bank of Japan Gov. Kazuo Ueda pledged to keep a closer eye on the yen as inflation nears the central bank's 2% target, signaling concern that the currency's weakness will drive up consumer prices too quickly. In the U.S., the inflation gauge favored by the Federal Reserve held steady between September and November, showing price increases remained mildly elevated as 2025 wound down. Meanwhile, a revised set of figures continued to show that U.S. economic growth powered ahead last summer, confirming an upswing that had surprised analysts in December.

Correction: Due to a technical error, an earlier version of this newsletter contained incorrect text under "BOE's Greene: Divergence Between Fed and BOE Would Lift U.K. CPI". 

Japan’s central bank held rates steady on Friday, avoiding a surprise that would have jolted markets already unnerved by fiscal anxiety.

The Bank of Japan’s first meeting of the year took place against a dramatic backdrop of bond market gyrations, worries about government policies and a volatile yen.

Given that, it will come as some relief that policymakers at the BOJ continued a cautious approach to tightening and maintained an upbeat outlook on the economy.

• Japan’s Consumer Inflation Cooled in Last Month of 2025

Volatility in the yen has fueled talk of potential intervention recently, with Japanese officials warning that authorities would take action to counter what they consider to be excessively sharp movements. On Friday, the Bank of Japan Gov. Kazuo Ueda said that the central bank is alert to the risk of yen fluctuations passing through to inflation. That comes as more companies seem to be willing to raise prices on their products, adding more upward pressure to inflation, he said. "We need to monitor the potential for domestic prices to affect inflation expectations, which in turn could impact underlying inflation," Ueda said at a news conference after the bank decided to maintain its policy rate at a three-decade high of 0.75%. The BOJ governor also promised to take the necessary steps to restore order in the bond market in the event of abnormal yield rises. (Dow Jones Newswires)

The personal-consumption expenditures price index, inflation gauge favored by the Federal Reserve, increased by 0.2% in October and by another 0.2% in November, the Commerce Department said Thursday. That amounted to annual PCE inflation of 2.8% in the 12 months through November, the same rate seen in September. Economists polled by The Wall Street Journal were expecting the November rate to stick at 2.8%.

U.S. gross domestic product grew at a 4.4% annualized rate between July and September, the Commerce Department said Thursday. That marked an acceleration from 3.8% in the three months prior, and from a slight economic contraction that began 2025. Initial numbers published in December had shown 4.3% third-quarter growth.

Manufacturing activity in the central U.S. was unchanged in January, as firms cited cooling demand despite continued expectations of future growth. The Federal Reserve Bank of Kansas City said Thursday that its Tenth District Manufacturing Survey's composite index held at 0 this month, the same as in December. The zero-level marks the dividing point between expansion and contraction in the sector. (DJN)

• U.K. Retail Sales Rose Unexpectedly Over Christmas
• A Major Tax Shake-Up Is Changing the Way Londoners Buy Homes

New Zealand consumer prices rose at a faster pace than expected in the fourth quarter, consistent with broad signs that an economic recovery is gathering momentum. The consumer price index increased 3.1% on year in the fourth quarter, slightly more than the 3.0% rise expected by economists, StatsNZ said Friday. Inflation is now above the Reserve Bank of New Zealand's 1% to 3% target band, and stands at its highest rate since mid-2024. (DJN)

8:30 a.m.: GDP by State
9:45 a.m.: US Flash Manufacturing PMI
9:45 a.m.: US Flash Services PMI
10 a.m.: University of Michigan Survey of Consumers - final

8:30 a.m.: Chicago Fed National Activity Index (CFNAI)
8:30 a.m.: Advance Report on Durable Goods
10: 30 a.m.: Texas Manufacturing Outlook Survey

The dollar is likely to weaken further given concerns about U.S. policy credibility and the risk of more aggressive interest-rate cuts by the Federal Reserve, Candriam's Nicolas Jullien says in a note. Even if U.S. growth remains firm, "policy credibility and governance narratives can generate bouts of dollar weakness," he says. The dollar's potential to rise is also more constrained when excessive policy easing is a meaningful possibility. Uncertainty over the inflation path and the risk of the gap between short and long-term Treasury yields widening is a negative mix for the dollar, he says. — Renae Dyer

The bar for an interest-rate increase in February by the Reserve Bank of Australia isn't that high. Citi economist Faraz Syed says a trimmed-mean inflation rate of 0.8% in the quarter will likely be enough to trigger a hike. Citi forecasts a 0.9% print but sees risk toward a 0.8% trimmed-mean outcome. Despite the noise, strong headline and rising trimmed-mean inflation point to the RBA hiking by 25 basis points in February, with a 0.9% or even 0.8% trimmed-mean outcome, he says. —James Glynn

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.