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From 25m ago Introduction: Japan joins the rate-hiking party, as Bank of England lurks Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The global interest rate rising cycle has spun again today, after the Bank of Japan decided to raise interest rates to their highest level in 31 years. The BoJ voted to raise its target interest rate by a quarter of one percentage point to 1.25%, the highest level since 1995.
The vote was not unanimous – with two board members dissenting to the hike. The move meant the BoJ has joined the US Federal Reserve and the European Central Bank in tightening monetary policy this month, as part of the global fight against inflation. But the Bank of England is, so far, resisting joining the battle, having yesterday voted to leave UK interest rates on hold at 3.75%.
The BoJ has been in a rate-rising cycle since 2024, when it lifted its policy rate out of negative territory. It has been under pressure to raise borrowing costs as the yen weakened steadily against the dollar this year, to levels which prompted policymakers to intervene to stabilise the currency. A hike today had been expected.
So the news that two BoJ policymakers opposed the move has excited the markets. Jim Reid , strategist at Deutsche Bank , reports: double quotation mark So although the central bank reiterated that it will continue raising rates if economic and inflation conditions evolve as projected, the market has reacted to the two high profile dissenters. The Yen is -0.72% lower at 157.10, having been at around 153.40 at the start of the week and the JGB curve has steepened, with 2yrs -2.2bps and 30yrs +3.2bps The agenda 7am BST: Retail sales data across Great Britain for August 10am BST: Eurozone construction output for July Key events 25m ago Retail sales rise across Great Britain 25m ago Introduction: Japan joins the rate-hiking party, as Bank of England lurks The ONS also reports that sales at British department stores picked up in August following “stock availability issues” in July.
Retail sales rise across Great Britain Despite the inflationary squeeze on households, retail sales across Great Britain have risen over the summer. The heatwave, a pick-up in web shopping, and the joys (and pain and disappointment !) of the men’s football World Cup, helped to lift spending over the three months to August, new data shows. Retail sales volumes rose by 0.9% in the June-August quarter, the Office for National Statistics has reported this morning.
Non-store retailers’ sales volumes rose following a particularly strong June period – perhaps because people preferred to order goods online rather than braving the high street in the heatwave. Retailers selling alcohol and beverages performed well across all three months to August, which they attributed to promotions, the hot weather, and the World Cup. In August alone, retail sales volumes rose by 0.5%, reversing a 0.5% drop in July.
August’s rise is unexpected (economists had forecast a 0.2% fall), so this is the latest piece of economic data to beat expectations after last week’s jump in UK GDP . ONS senior statistician Jon Gough said: double quotation mark “Retail sales increased in the latest three months, with a particularly strong June for online outlets helping to boost their sales across the period. Food store sales also rose, with supermarkets doing well in July and August.
“Meanwhile, retailers selling alcohol and beverages performed well across all three months, which they attributed to promotions, the hot weather and the World Cup.” Introduction: Japan joins the rate-hiking party, as Bank of England lurks Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The global interest rate rising cycle has spun again today, after the Bank of Japan decided to raise interest rates to their highest level in 31 years. The BoJ voted to raise its target interest rate by a quarter of one percentage point to 1.25%, the highest level since 1995.
The vote was not unanimous – with two board members dissenting to the hike. The move meant the BoJ has joined the US Federal Reserve and the European Central Bank in tightening monetary policy this month, as part of the global fight against inflation. But the Bank of England is, so far, resisting joining the battle, having yesterday voted to leave UK interest rates on hold at 3.75%.
The BoJ has been in a rate-rising cycle since 2024, when it lifted its policy rate out of negative territory. It has been under pressure to raise borrowing costs as the yen weakened steadily against the dollar this year, to levels which prompted policymakers to intervene to stabilise the currency. A hike today had been expected.
So the news that two BoJ policymakers opposed the move has excited the markets. Jim Reid , strategist at Deutsche Bank , reports: double quotation mark So although the central bank reiterated that it will continue raising rates if economic and inflation conditions evolve as projected, the market has reacted to the two high profile dissenters. The Yen is -0.72% lower at 157.10, having been at around 153.40 at the start of the week and the JGB curve has steepened, with 2yrs -2.2bps and 30yrs +3.2bps The agenda 7am BST: Retail sales data across Great Britain for August 10am BST: Eurozone construction output for July
Source: The Guardian
