Japan’s consumer price index (CPI) excluding fresh food and energy rose to 2.4% in September from 1.9% in August, putting price trends in focus before the Bank of Japan’s Oct. 29-30 policy meeting and an updated inflation outlook.
The Statistics Bureau of Japan reported that the all-items index and the measure excluding fresh food each rose 2.1% year over year. Both readings were below the 2.4% measure that also excludes energy. The figures use 2025 as the base year.
Brown Brothers Harriman (BBH) analyst Elias Haddad put the swaps-implied probability of a 25-basis-point rate increase to 1.50% at 75% for the BOJ’s Dec. 17-18 meeting, FXStreet reported Monday. FXStreet also said Haddad’s analysis implied nearly 75 basis points of tightening over the following 12 months.
EconoTimes previously reported BBH’s swaps estimate that October rate-hike odds were below 5%; that estimate concerned the October meeting.
The BOJ raised its overnight call-rate target from about 1% to about 1.25% in September, effective Sept. 24, in a seven-to-two vote. In its policy statement, the bank said “underlying CPI inflation has been approaching 2 percent” and flagged a risk that it could move above the 2% price-stability target.
The BOJ cited high crude oil prices, yen depreciation, demand related to artificial intelligence, and price pressures passing through business transactions. It also pointed to firms passing wage increases on to selling prices and described financial conditions as accommodative.
Reuters reported Oct. 20 that sources expected the BOJ to hold rates at its October meeting unless another yen decline raised import costs and broader inflation. In a separate report Monday, Reuters said the bank may give greater attention to the possibility of inflation exceeding its target in its updated outlook, leaving a December increase among its options.
The BOJ is scheduled to meet Oct. 29-30 and release its October Outlook Report on Oct. 30. Its next scheduled policy meeting after that is Dec. 17-18.
