The BOJ’s August core CPI rose 2.6% from a year earlier, exceeding its 2% target for the 23rd consecutive month. This has fueled market expectations of a rate hike before year-end. Attention is also focused on the next phase of monetary policy, taking into account underlying price trends excluding special factors and the impact of external factors.
The BOJ’s August core CPI, which excludes the effects of fresh food and government price measures, rose 2.6% year on year, up from 2.3% in the previous month. It remained above the BOJ’s 2% target for the 23rd consecutive month.
The nationwide core CPI for August released by the Ministry of Internal Affairs and Communications rose 1.7%, remaining below the BOJ’s target for the eighth consecutive month, but core CPI has become a focus of market attention. The impact of support for electricity and gas bills has been cited as a factor pushing prices lower.
At its monetary policy meeting on the 18th, the BOJ raised its policy rate to 1.25%, marking the fastest pace after 6 rate hikes. At a press conference, Governor Ueda Kazuo (植田和男) indicated a positive stance toward further rate hikes as underlying inflation, excluding temporary factors, approaches the target.
Excluding special factors, price indicators are being affected by higher crude oil prices, yen depreciation and AI-related demand, while core CPI is expected to exceed 2% again in the second half of the fiscal year. Markets will continue to closely monitor expectations of a rate hike before year-end.