FX.co ★ Japan Coincident Index Hits 5-1/2-Year High

Japan's coincident economic indicators index, which examines metrics like factory output, employment, and retail sales, rose to 116.9 in February 2025, compared to a revised 116.1 in January, according to preliminary data. This figure marks the highest point since September 2019, bolstered by a moderate economic revival characterized by increasing private consumption and business investments, stable corporate profits, and enhancing employment and income scenarios. A recovery in exports is anticipated in line with the expansion of overseas economies, with imports likewise expected to increase. Despite these positive trends, cost pressures persist, and concerns regarding US trade policy have grown. From a monetary perspective, the Bank of Japan indicated the possibility of additional interest rate hikes if current economic and inflation trends continue. In January, the central bank implemented a 25 basis point increase in its key short-term interest rate, bringing it to 0.5%, marking the third rate hike since it ceased negative rates in March 2024.