Japan core inflation slips to over four-year low, weakening BOJ rate-hike case
Japan's core inflation slowed to 1.6% in April, the lowest reading since March 2022. The data could push the Bank of Japan to reassess the timing of its next rate hike. The yen weakened by about 0.8% against the dollar.
Data released by Japan's Ministry of Internal Affairs showed the consumer price index excluding fresh food rose 1.6% year on year in April, undershooting the 1.7% expected by economists polled by Reuters and below the 1.8% reading in March. Services inflation was limited to 1.1%.
The Bank of Japan's policy rate, kept within a 0% to 0.5% target band, was left unchanged at its last meeting. After the release, dollar-yen rose to 156.40 in Tokyo and the 10-year government bond yield retreated by 5 basis points. JPMorgan analysts now expect no move at the June meeting.
Governor Kazuo Ueda said at his April press conference that 'we need to see data converging consistently with the target'. The softer inflation reading has prompted equity investors to price in a more dovish central bank. The Nikkei 225 closed Friday up 1.4%.
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