TOKYO, April 26 (Reuters) – Core inflation in Tokyo accelerated in April, climbing toโค 2.6% year-on-year, bringing the Bank of Japan (BOJ) closer to a potential interest rate hike as sustained price pressures build. The โฃfigure, up from 2.5% in March, marks the fastest pace of core inflation in Tokyo in over three decades and exceeds โฃeconomists’ forecasts of 2.4%.
The data fuels expectations that the BOJ may signal a shift โฃin its ultra-loose monetary policy at โคits upcoming meeting in late April,โ potentially pavingโ the way for an end to negative interest rates. While the BOJ has maintained โขits commitment to accommodative policy, aiming to sustainably achieve its 2% inflation target, persistent price increases -โข driven by โrising import costs and strengthening domestic demand – are intensifying pressure on the central bank to reassessโ its โขstance. This impacts Japanese households and businesses, andโค also globalโฃ financial markets closely watching for any change in the BOJ’sโค policy direction.
Core inflation,โข which excludes volatile fresh foodโฃ prices, is a key indicator closely watched by โคthe BOJ โขas โคit gauges underlyingโ inflationary trends. The latest โคreading reflects increases in aโ broad range of goods and services, including energy, food, and durable consumer goods. Excluding freshโ food and energy, so-called core-core inflation rose to 3.1% inโ April,further indicating broadening price pressures within the Japanese economy.
The BOJโ has repeatedly stated its intention to maintain accommodative monetary policy โคuntilโฃ it is indeed confident that inflation is sustainably on track to reach its 2% target. Though,the accelerating pace of inflation inโ Tokyo,combined withโ recent comments fromโข BOJ officials suggesting a willingness to consider policy adjustments,suggests that โthe central bankโ might potentially be nearing a tipping point.Analysts predict that if the national โcore inflation data, due next โขweek,โ confirms the trend of rising prices, theโ BOJ could begin to signal a shift in its policy stance at its April 27-28 meeting. Potential changes could includeโค adjustments to its yield curve โcontrol policy or aโค gradualโข increase โคin interest โคrates.
