Key Takeaways
- Bank of Japan (BOJ) board member Naoki Tamura advocates for further interest rate hikes, stating that the current policy rate of 0.5% is still "far away" from the neutral rate, which he believes should be at least 1%.
- Global technology and automation giant ABB (ABB) reported robust Q3 2025 earnings, with operational EBITA reaching $1.74 billion on a 19.2% margin, exceeding analyst expectations.
- India is actively pursuing a diversified energy sourcing strategy, increasing imports from the U.S. while prioritizing consumer protection and aiming for both price stability and supply security amidst volatile global energy markets.
- Japan's Tertiary Industry Index for August registered a decline of -0.4% month-on-month, missing analyst estimates of -0.2%.
BOJ Signals Further Rate Hikes Amid Inflationary Pressures
Bank of Japan (BOJ) board member Naoki Tamura has strongly indicated that the central bank needs to continue adjusting its easing stance to move interest rates closer to a neutral level. Tamura stated that a "significant gap remains" between the current policy rate of 0.5% and the neutral rate, which he estimates to be at least around 1%. He emphasized that previous rate hikes have had "little overall effect" on Japan's economy, suggesting that more tightening is necessary. Tamura believes the neutral interest rate should be viewed within a large range, acknowledging the difficulty in precise estimation.
The hawkish stance comes as Tamura warns that a weak yen is likely to speed up price increases, necessitating vigilant monitoring of foreign exchange markets. He noted that with inflation risks becoming more skewed to the upside, the BOJ is in a phase of considering rate hikes to bring policy closer to neutral, though he cautioned against rushing to restrictive levels. Tamura was one of two dissenters in the BOJ's September meeting, where he unsuccessfully proposed a 0.75% rate hike.
Japan's Economic Indicators Show Mixed Signals
Despite Tamura's view that Japan's economic growth rate is likely to rise, the latest data for the country's service sector showed a contraction. Japan's Tertiary Industry Index for August recorded a month-on-month decline of -0.4%, falling short of the estimated -0.2% and reversing the previous month's revised growth of 0.2%. This index measures the output of the service sector, which includes wholesale trade, medical, health care, and information & communications.
India's Proactive Energy Strategy and Geopolitical Balancing Act
India's Foreign Ministry has underscored the nation's commitment to consumer protection amidst volatile energy markets, with a strategy targeting both price stability and supply security. The country is actively working to increase its energy sourcing from the United States over many years, a move that has seen U.S. crude oil imports surge by 51% in the first half of 2025, reaching 0.271 million barrels per day (mb/d). Liquefied natural gas (LNG) imports from the U.S. also nearly doubled in FY25, rising from $1.41 billion to $2.46 billion.
This diversification effort comes as India navigates complex geopolitical dynamics, including U.S. President Donald Trump's claims regarding India's purchases of Russian oil and the imposition of tariffs. India's Ministry of External Affairs clarified that its import policies are guided by safeguarding consumer interests in a volatile energy scenario and broad-basing its energy sourcing. Tamura of the BOJ also noted that the effects of US tariffs require careful, unbiased assessment, highlighting the broader impact of trade policies.
ABB Delivers Strong Q3 2025 Performance
ABB (ABB), the global technology company, announced robust financial results for the third quarter of 2025, surpassing market expectations. The company reported an Operating EBITA of $1.74 billion, with an impressive 19.2% margin, exceeding estimates of $1.71 billion and 19.1% respectively. Orders also saw strong growth, reaching $9.14 billion against an estimated $8.92 billion.
Looking ahead, ABB projects comparable revenue growth in the mid-single digit range for Q4. The strong performance was driven by healthy demand in sectors like data centers and electrification. However, regional performance was mixed, with ABB's order book in India experiencing a 7% decline, attributed to selective capital expenditure activity and the timing of order finalizations. The company also plans to divest its Robotics division to SoftBank Group, aiming to streamline operations and leverage AI and robotics synergies.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.