Japan’s core consumer prices accelerated 2.1% year on year in September, exceeding the BOJ’s 2% target for the first time in 9 months. Expectations are spreading that interest rates will remain unchanged next week.
Japan’s core consumer price inflation accelerated to 2.1% year on year in September, again exceeding the BOJ’s 2% target. Growth accelerated from a 1.7% increase in August.
Higher fuel costs, persistently elevated import prices reflecting yen weakness, and strong AI demand have been cited as factors pushing up prices, offsetting the effects of the government’s fuel subsidies.
The BOJ raised its policy rate to 1.25% last month, the highest level in 31 years. Markets widely expect monetary policy to remain unchanged next week.
BOJ Governor Ueda Kazuo (植田 和男) has warned that underlying inflation could exceed the 2% target amid price pressures from the Middle East conflict, yen weakness and strong AI demand.