06.02.202605:02:44UTC+00Japan Coincident Index Slips to 4-Month Low

Japan's coincident economic index, a key measure that reflects factory output, employment, and retail sales, declined to 114.5 in December 2025 from 114.9 in November, according to preliminary figures. This is the lowest level recorded since August, highlighting the negative impact of U.S. trade policies on industries like automobiles. Despite this setback, the overall economy maintains a steady recovery, bolstered by Prime Minister Sanae Takaichi's November announcement of a fiscal package valued at JPY 21.3 trillion. This initiative aims to alleviate household financial pressures, stimulate economic growth, and combat rising inflation. On the monetary policy front, the Bank of Japan increased its key short-term interest rate by 25 basis points to 0.75% in December, marking its second rate hike of the year. This adjustment indicates a careful shift from an ultra-loose policy stance. Nonetheless, officials have noted that real interest rates continue to be “significantly negative,” and overall financial conditions remain broadly supportive.