Japan's Q2 GDP Growth Slows, But BOJ Rate Hike Still on Track

The Japanese economy grew at an annualized rate of 1.1% in Q2, but this was slower than expected and below the revised 1.9% growth rate from the previous quarter.

The quarterly GDP growth rate was 0.3%, which missed the consensus forecast of 0.5%. Household spending fell for the first time in eight quarters, while business investment declined by 1.2%.

Kazutaka Maeda, a senior economist at Meiji Yasuda Research Institute, described the details as 'somewhat weaker than expected', but noted that temporary drags were unlikely to alter the timing of the Bank of Japan's next interest-rate increase.

The BOJ is widely expected to raise interest rates in September, despite the GDP miss. The yen strengthened slightly after the release, with USD/JPY falling to 158.965 before recovering to 159.07 by 05:08 BST.