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The Bank of Japan is preparing to upgrade its economic growth forecast at its upcoming policy meeting on January 23, though it is expected to keep its benchmark interest rate on hold.

Sources indicate the central bank will likely revise its growth projection for the fiscal year starting in April upward from the current 0.7%. The forecast for the current fiscal year may also see an upgrade.

Fiscal Stimulus Fuels Economic Optimism

The improved outlook is primarily driven by a significant economic stimulus package from Prime Minister Sanae Takaichi's government. Ratified by parliament last month, the fiscal measures allocate ¥17.7 trillion ($113 billion) to bolster the economy and buffer against the effects of sustained inflation.

Bank of Japan officials reportedly believe these government measures will increase the likelihood of achieving their economic goals by supporting underlying inflation. The central bank’s decision to raise its policy rate to 0.75% in December—the highest level since 1995—had already taken the government's new stimulus into account.

Rate Hike Trajectory Remains Undecided

Regarding future interest rate increases, BOJ officials are not committing to a specific timeline. While aware of market expectations for rate hikes roughly every six months, they have no preconceived path just weeks after the last increase. The bank’s official stance remains unchanged: further rate hikes will depend on whether the economic outlook materializes as projected.

Inflation: Focusing on the Underlying Trend

The BOJ is also evaluating its outlook for consumer prices, excluding fresh food. While a downgrade to this specific metric may be considered, officials are emphasizing the broader price trend over figures influenced by temporary, one-off factors.

They see little reason to alter their core forecast, which projects underlying inflation will align with the bank's target during the second half of its three-year projection period that began last April.

Japan's headline inflation rate is expected to slow in the coming months as food price increases moderate and Takaichi's price-control measures cap utility costs. Some private-sector economists suggest this slowdown could complicate future rate hikes. However, BOJ officials are expected to look past these temporary effects, keeping underlying inflation as the primary driver for their policy decisions.

Weak Yen Remains a Key Watchpoint

Even after the December rate hike, the Japanese yen has remained weak. Officials will continue to monitor the currency's impact on price trends closely, particularly as Japanese businesses have shown a greater willingness to pass on higher costs to consumers through price increases.

Turkey will maintain its strict economic policy framework, signaling no immediate pivot even as inflation shows signs of cooling, according to Vice President Cevdet Yilmaz. His comments push back on growing expectations that a slowdown in price growth could lead to a faster loosening of monetary policy.

Speaking to reporters on Thursday, Yilmaz confirmed there would be "no relaxation" of the current economic program. While he noted that "adjustments can always be made," he stressed that the government would not compromise on the scale or determination of its policy.

Inflation Cools, But Policy Stays Restrictive

Yilmaz's remarks provide crucial context for Turkey's recent economic trajectory. Policymakers launched an aggressive tightening cycle in mid-2023 to combat soaring prices. After lifting its policy rate to 50%, the central bank initiated a gradual easing, cutting its one-week repo rate to 38% in December.

This strategy has yielded results, with headline inflation falling to 30.9% in December from a peak of over 75% in 2024. The combination of high interest rates and falling inflation has left Turkey with one of the highest real interest rates among emerging markets, currently standing at approximately 7%.

Navigating Future Inflation and Market Expectations

Looking ahead, Yilmaz highlighted a gap between official forecasts and market sentiment. He stated that the government's year-end inflation target for 2026 is below 20%, whereas market expectations are closer to 23%.

He anticipates that the disinflation trend expected in the first quarter will begin to influence price expectations more broadly. To reinforce these efforts, he added that monetary policy would continue to receive support from corresponding fiscal measures.

Addressing Capital Flight Concerns

When asked about the risk of capital flight driven by interest rate cuts, Yilmaz expressed confidence in the current strategy. He argued that if policy easing occurs alongside falling inflation, real interest rates will remain attractive.

This stability, he concluded, should prevent a significant shift of capital into foreign currency or gold, reassuring investors about the sustainability of Turkey's economic plan.

Israel has declared Lebanon's efforts to disarm Hezbollah insufficient, escalating pressure on Beirut shortly after the Lebanese army announced it had established operational control in the country's south. The move highlights a widening gap in expectations following a 2024 war that significantly weakened the Iran-backed Shiite group.

Since a US-brokered ceasefire was signed in November 2024, the Lebanese government has been tasked with bringing all weapons in the country under state control.

Lebanon Claims Control as Deadline Looms

On Thursday, the Lebanese army stated that the first phase of its security plan had been achieved in an "effective and tangible way." Military officials reported that their forces had secured all areas under their authority south of the Litani river, with the exception of positions still occupied by Israeli forces.

The army is working toward a year-end deadline to clear all non-state weaponry from the southern region before extending its operations to other parts of the country. In its statement, the military acknowledged that more work was needed to clear unexploded ordnance and dismantle tunnels.

Israel Dismisses Progress, Demands Full Disarmament

Responding directly to the Lebanese army's announcement, Israeli Prime Minister Benjamin Netanyahu's office issued a sharp rebuke, insisting on the complete disarmament of Hezbollah as stipulated by the 2024 ceasefire.

While describing the Lebanese government's actions as "an encouraging beginning," Israel's statement detailed several key concerns:

• The efforts are "far from sufficient."

• Hezbollah is actively attempting to rearm and rebuild its "terror infrastructure" with Iranian support.

• The group's full disarmament is "imperative for Israel's security and Lebanon's future."

Ceasefire Tensions and Ongoing Israeli Strikes

Israel has been conducting near-daily strikes in southern Lebanon and sometimes deeper into the country. It accuses Hezbollah of trying to reestablish its military infrastructure and accuses Beirut of failing to uphold the 2024 agreement.

Hezbollah, which did not immediately comment on Israel's statement, maintains that it has respected the ceasefire's terms in the south. However, the group also argues that the agreement does not apply to the rest of Lebanon.

Taiwan Semiconductor Manufacturing Co (TSMC) said on Friday its December sales fell from the previous month but grew annually, capping off a positive year as AI-fueled chip demand remained strong.

The world's largest contract chipmaker said in a statement that consolidated revenue for December came in at NT$335.0 billion ($10.6 billion), down 2.5% from November but up 20.4% from a year earlier.

TSMC said revenue for the full year ended December 2025 totalled NT$3.81 trillion, marking a 31.6% increase from 2024, reflecting sustained demand linked to artificial intelligence, high-performance computing, and advanced semiconductor nodes.

Investing.com calculations showed revenue for the fourth quarter totalled NT$1.046 trillion, compared to NT$868.42 billion in the previous corresponding period.

TSMC, a key supplier to companies including Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), has benefited from a surge in global investment in AI infrastructure, which has in turn helped offset weaker demand in some consumer electronics segments.

The company is due to provide detailed guidance on revenue and capital spending when it reports fourth-quarter earnings on Jan. 15.

Source: Investing

Beijing is sending its strongest signals yet that a major policy shift is coming to rescue its beleaguered real estate market. The move has raised expectations among investors that more substantial support measures could be deployed later this year to tackle the country's worsening property slump.

Beijing's Key Publication Hints at Decisive Action

The catalyst for this renewed optimism was a January 1, 2026, article in Qiushi, the official journal of the Communist Party. The commentary called for "more powerful and precise measures" to stabilize property market expectations, a significant move that has not gone unnoticed by market watchers.

Public statements in official outlets like Qiushi are closely analyzed as they often signal internal policy debates and foreshadow shifts in government strategy before formal announcements are made.

According to Ting Lu, chief China economist at Nomura, the article's scope makes it particularly noteworthy. "This is the most comprehensive assessment of China's property markets published in Qiushi since the sector's collapse in mid-2021," Lu stated in a report. "Its significance should not be overlooked."

The timing is also critical, appearing ahead of China's annual parliamentary meeting in March, where top leaders will set economic goals and release details of the next five-year development plan.

Why a Journal Article is Fueling Market Optimism

Investor sentiment has responded swiftly to the potential policy pivot. The Hang Seng China A Properties Index, which includes major developers like Vanke and Seazen, jumped more than 6% to start the year.

The prolonged downturn has persisted despite a call from top leaders in September 2024 to halt the sector's decline. New home sales have plummeted by nearly half since Beijing began its crackdown on developers' high leverage. According to a report from the China Real Estate Information Corp., the floor space sold in 2025 fell to levels last seen in 2009.

So far, government measures have been limited to easing some purchasing restrictions originally designed to curb speculation. The Qiushi article, however, advocates for policies to be implemented "in one go," contrasting with the "piecemeal approach" taken to date.

The Deepening Slump: Developer Debt Under Pressure

The financial stress across the property sector remains acute. Vanke, once one of China's largest developers, has struggled with its debt obligations, leading S&P Global Ratings to downgrade its debt. The company recently averted a default on a 2 billion yuan ($283 million) onshore bond due December 15, 2025, after securing an extension.

This is not an isolated incident. In a broader sign of strain, the outstanding loan balance for Chinese real estate developers fell year-over-year in the third quarter for the first time in over a decade, based on official data from Wind Information.

The Qiushi article warned that policymakers must prepare for potential bankruptcies of real estate companies still grappling with high debt levels.

Shifting Gears: A New Urgency for Property Stabilization

The commentary also directly challenges two prevailing narratives in Beijing.

First, it rejects the view that real estate is no longer a critical component of China's economy. Second, it pushes back against framing the slump as a simple "period of adjustment," arguing that policymakers must "shorten the adjustment period as much as possible."

This signals a potential move away from tolerating a prolonged downturn toward more proactive intervention.

Michelle Kwok, HSBC's head of Asia real estate and Hong Kong equity research, noted that the government is now expected to roll out more innovative and targeted measures. "The most impactful policies will likely be those that meaningfully reduce the financial burden on home buyers," her report stated, adding that a "focus on acquiring excess inventory will be a key step to resolving bottlenecks."

This is crucial because Chinese developers have historically relied on selling apartments before completion. With new sales and borrowing channels frozen, many have struggled to finish construction, leaving homebuyers with mortgages on unfinished properties.

What's Next? Analysts Eye March Meeting for Policy Details

Economists believe more assertive action is necessary to stabilize the sector and the broader economy. "Beijing cannot afford to let its property sector slide indefinitely," said Nomura's Ting Lu. He suggested that "rising trade tensions and the likely unsustainable strength in the export sector" might compel Beijing to significantly ramp up its policy response.

Cliff Zhao, chief economist at China Construction Bank International, echoed the need for more assertive policy, suggesting that targeted support for larger cities could be effective without being excessively costly. He expects concrete details to emerge at the March parliamentary meeting or at subsequent high-level meetings.

However, some remain cautious. Larry Hu, chief China economist at Macquarie, projects that home construction completions will fall by 12% in the coming year, following a 17% drop last year. He also forecasts a 7% decline in new home sales by floor space.

Hu believes Beijing may not introduce significant stimulus until the export sector weakens, possibly due to an "AI bust or Fed tightening." If that happens, he noted, "Beijing would have to rely on domestic stimulus to achieve its growth target," making housing support the "most likely option."

Iran was hit by a nationwide internet blackout Thursday night as widespread protests over the country's economic crisis intensified, placing significant pressure on its leadership.

The internet shutdown, first reported by the monitoring organization NetBlocks, is a tactic Iranian authorities have previously used to quell unrest. Earlier on Thursday, NetBlocks had already detected outages in the western city of Kermanshah, where authorities were cracking down on demonstrators.

Protests spread across Iran, with demonstrators gathering in major urban centers.

Nationwide Unrest and Growing Defiance

Demonstrations have now reached all 31 of Iran's provinces and show no signs of losing momentum. In a significant act of defiance, protesters in the southern Fars province tore down a statue of Qassem Suleimani, the former Revolutionary Guards commander widely revered by government supporters. Verified footage showed crowds cheering as the statue fell.

In Kurdish regions and dozens of other cities, shopkeepers participated in a general strike on Thursday, following calls from seven Kurdish political groups. The Hengaw rights group shared footage of closed shops in the provinces of Ilam, Kermanshah, and Lorestan. The group also accused authorities of opening fire on demonstrators in Kermanshah and Kamyaran, injuring several people.

Protests continued into Thursday night. In northwest Tehran, a large crowd gathered on Ayatollah Kashani Boulevard, supported by the sound of honking car horns, according to social media images verified by Agence France-Presse. Other images showed demonstrations in the western city of Abadan.

Mounting Casualties and a Violent Crackdown

The human cost of the protests is rising. The Norway-based NGO Iran Human Rights (IHR) reported on Thursday that security forces have killed at least 45 protesters, including eight children, since the demonstrations began in late December.

IHR described Wednesday as the deadliest day of the 12-day movement, with 13 confirmed deaths. "The evidence shows that the scope of the crackdown is becoming more violent and more extensive every day," said IHR director Mahmood Amiry-Moghaddam. He added that hundreds have been wounded and over 2,000 arrested. A woman protesting in Abadan on Wednesday was reportedly shot in the eye.

Official statements and media inside Iran report a death toll of at least 21, including security personnel. A police officer was killed west of Tehran while trying "to control unrest," according to the Fars news agency.

Rights groups have accused authorities of using unlawful tactics. Amnesty International stated that "Iran's security forces have injured and killed both protesters and bystanders" and accused them of raiding hospitals to detain the wounded.

The Economic Meltdown Fueling the Protests

The protests were triggered by a sudden collapse in the nation's currency and a deepening economic malaise, leaving the government with few easy answers. The currency has continued to fall, and a government decision to end a subsidized exchange rate for importers has already caused grocery prices to soar.

For ordinary Iranians, daily life has become increasingly unaffordable. The average price of food has jumped by over 70% in the last year, while medicine costs have risen by about 50%.

The government has largely blamed the economic crisis on external factors, particularly harsh Western sanctions related to its nuclear program. While promising to tackle corruption and price gouging, officials say they have limited tools to fix the economy.

Iranian President Masoud Pezeshkian called for restraint on Thursday, urging "dialogue, engagement and listening to the people's demands."

A Leaderless Movement Faces International Scrutiny

The current protest movement, the largest in three years, appears decentralized. This contrasts with the 2022 "Woman, Life, Freedom" demonstrations, which rallied around the death of 22-year-old Mahsa Amini in police custody.

Reza Pahlavi, the exiled son of the shah overthrown in the 1979 revolution, is attempting to establish a leadership role. In a widely shared video, he urged Iranians to shout from their windows to show support. While some protesters have been heard chanting in his favor, his level of support remains unclear. A social media channel linked to Iran's security forces released a video allegedly showing agents warning people against participating in Pahlavi's protest calls.

The government's crackdown has been violent but has not yet reached the intensity seen in 2022. Analysts suggest the state may feel less secure than it did three years ago, having been destabilized by its June war with Israel.

International pressure is also mounting. US President Donald Trump has repeatedly threatened to "hit them very hard" if Iranian authorities "start killing people." The US State Department has actively encouraged protesters online, while Treasury Secretary Scott Bessent described the Iranian economy as being "on the ropes."

Germany's foreign minister, Johann Wadephul, condemned the "excessive use of force" by Iranian authorities. In response, Iran's foreign ministry and military have criticized Trump's comments, with the army chief threatening pre-emptive strikes against states that threaten Iran.