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yesterday

Japan Inflation Cools to 2.7% in August as BOJ Seen Holding Rates

Investors expect no change at 0.5% with policymakers focused on whether underlying inflation stays above target.

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Overview

  • Core consumer prices rose 2.7% year over year in August, the slowest pace in nine months and in line with forecasts.
  • Headline CPI also printed 2.7%, down from 3.1% in July, marking the lowest reading since November 2024.
  • The BOJ’s preferred core-core gauge, excluding fresh food and energy, eased to 3.3% from 3.4% in July.
  • Rice price inflation cooled to 69.7% from July’s 90.7% but remains exceptionally elevated.
  • The BOJ concludes its meeting Friday and is widely expected to keep the policy rate at 0.5%, with HSBC flagging a possible 25 bp hike in October and LDP lawmaker Taro Kono pressing for faster tightening.