Japan plans 10 trillion yen for semiconductors and AI; JPMorgan expects December rate hike.

On Tuesday (November 12),Platform trading the Asia-Pacific stock indices generally fell, with only the Nikkei 225 index rising against the trend by 0.59%, reflecting market optimism about Japan's economic outlook. After being re-elected, Japanese Prime Minister Shigeru Ishiba announced that the government plans to provide at least 10 trillion yen (approximately 468.8 billion RMB) by fiscal year 2030 to support the revitalization of the semiconductor and artificial intelligence industries. This strategic goal aims to attract more than 50 trillion yen in public and private investment over the next decade to enhance Japan's competitiveness in the global technology sector.

Meanwhile, the minutes of the Bank of Japan's October policy meeting showed that the council members remain cautious about the policy of raising interest rates but have not explicitly ruled out the possibility of a rate hike in the near term. Recently released data in Japan indicates that workers' basic wages have seen the largest increase in more than thirty years, suggesting a robust economic recovery, which also provides some support for the Bank of Japan's rate hike outlook.

In its latest research report, JPMorgan noted that given the current good momentum of income growth in Japan and the potential further devaluation pressure on the yen, the Bank of Japan may accelerate the pace of interest rate hikes. JPMorgan predicts that the Bank of Japan may first raise rates by 25 basis points in December 2023, followed by further adjustments in April and October 2025. Previously, the institution's expectation was to raise rates in June and December 2025. JPMorgan believes that the trends of income growth and yen depreciation may accelerate the upward inflation path, prompting the Bank of Japan to adjust monetary policy earlier.

Through massive investments in the technology industry and policy adjustments, Japan is actively laying the groundwork for economic recovery and stabilizing the currency market.

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