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Japan’s Central Bank Confronts Two-Way Risk Fueled by War in Middle East
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- The Bank of Japan is expected to hold its policy rate at 0.75% at its meeting, extending a pause amid Middle East war uncertainty.
- Supply-chain disruptions and surging energy costs from the conflict threaten to slow growth and fan inflation, posing stagflation risk.
- The central bank is likely to raise interest rates in the near future, with the market pricing a 60% chance of a June hike.
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BOE Survey Finds Inflation Expectations Rise, But Wage Outlook Cools
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- U.K. businesses expect to raise prices by 3.8% over the next 12 months, up from 3.5% in March, a Bank of England survey found.
- The Bank of England survey also indicated that wage increases were seen slowing among the 2,030 chief financial officers polled.
- Bank of England regional agents reported businesses are worried by the conflict but see few significant impacts on output or activity.
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German Business Sentiment Dives to Lowest Since 2020 as War Hits Outlook
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- German business confidence fell to a near six-year low in April, with the Ifo Institute’s index dropping to 84.4 from 86.3 in March.
- The decline in sentiment affected all four sectors measured by Ifo, and private-sector activity slipped into contraction this month.
- Leading German economic institutes downgraded the country’s 2026 GDP growth forecast to 0.6% from 1.3% due to the conflict.
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Japan Consumer Inflation Picks Up as Mideast War Fuels Energy Costs
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- Japan’s consumer prices excluding fresh food climbed 1.8% in March, driven by higher energy costs.
- Energy prices declined 5.7% in March, a slower drop than February’s 9.1% fall.
- The Japanese central bank is expected to keep its policy rate unchanged next week, but will likely seek further increases.
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U.K. Consumer Sentiment Dragged Further by Iran War
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- U.K. consumer sentiment fell four points to minus 25 in April, the biggest fall in a year and lowest since October 2023.
- Fuel sales rose 6.1% in March, the highest monthly jump since April 2021, driving overall U.K. retail-sales volumes up 0.7%.
- The International Monetary Fund downgraded the U.K.’s growth forecast to 0.8% from 1.3% due to the war in Iran.
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Russia’s Central Bank Continues to Cut Rates
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- Russia’s central bank cut its key interest rate for the eighth consecutive meeting, lowering it to 14.5% from 15.5%.
- The rate reduction brings borrowing costs down from a 2025 peak of 21%.
- The central bank indicated further rate cuts are possible, contingent on a sustainable inflation slowdown, despite rising oil prices.
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U.S. Jobless Claims Rose Last Week
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- U.S. jobless claims rose to 214,000 in the week through April 18, exceeding economists’ expectations.
- Continuing claims increased to 1.82 million in the week through April 11, up from 1.81 million a week earlier.
- Jobless claims have remained relatively stable, reflecting a persistent “low hire-low fire” dynamic in the labor market.
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Canada Producer Prices Rise in March
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- Canadian industrial product prices rose 2.4% in March, driven by a record 27.4% jump in energy products amid the Iran war.
- Raw material costs for Canadian companies increased 12% in March, and consumer prices climbed 2.4% on a year earlier.
- The Middle East conflict lifted Canadian firms’ inflation expectations and raised worries about passing on higher costs.
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About Us
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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