FX.co ★ Japan Coincident Index Revised Upward

Japan's index of coincident economic indicators, which encompasses factory output, employment, and retail sales, rose to 117.3 in February 2025. This figure surpasses the preliminary estimate of 116.9 and follows a revised increase from 116.4 in the previous month. Marking the highest level since September 2019, this rise is driven by a moderate economic recovery characterized by rebounding private consumption and business investments, modest corporate profits, and improving employment and income conditions. Exports are anticipated to recover despite the looming trade risks posed by US tariffs, with imports expected to grow correspondingly. However, cost pressures persist. On the monetary policy front, the Bank of Japan has indicated the possibility of further interest rate hikes should economic and inflation conditions develop as anticipated. In January, the central bank raised its key short-term interest rate by 25 basis points to 0.5%, marking the third increase since the institution concluded its negative interest rate policy in March 2024.