Analysis-How Japan's election outcome muddles the BOJ's policy path

Analysis-How Japan's election outcome muddles the BOJ's policy path

Source: EODHD - https://www.investing.com/news/economy-news/analysishow-japans-election-outcome-muddles-the-bojs-policy-path-4144943
Published: Jul 22, 2025 12:11 AM

By Leika Kihara TOKYO (Reuters) -Japan’s election outcome may put the central bank in a double bind as prospects of big spending could keep inflation elevated while potentially prolonged political paralysis and a global trade war provide compelling reasons to go slow on rate hikes. Lingering political uncertainty may also weaken the yen and push up import costs, some analysts say, adding to mounting price pressures that conflict with the Bank of Japan’s current approach to stand pat until the political storm calms. The rising cost of living was among factors that led to the bruising defeat of Prime Minister Shigeru Ishiba’s ruling coalition in upper house elections on Sunday. With inflation...

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