Tokyo inflation jumps to 2.7% in September, topping forecasts
Core-core CPI excluding fresh food and energy rose 3.0%, well above the 2.5% consensus, ahead of the Bank of Japan's national CPI release
Published
Tokyo's consumer price index rose 2.7% year-on-year in September, above the 2.5% consensus and up from 1.9% previously. Core CPI, which excludes fresh food, rose 2.7% against a forecast of 2.3%. Core-core CPI, which strips out both fresh food and energy, rose 3.0%, versus expectations of 2.5%.
The Bank of Japan raised its policy rate by 25 basis points to 1.25% at its September 17-18 meeting, the highest level since 1995, according to CNBC. The move took effect September 24 and followed a first hike in June and a hold in July, according to data from newtrading.io. The board voted 7-2, with members Toichiro Asada and Ayano Sato dissenting, and the BOJ cited a risk that inflation could run above its 2% target, CNBC reported.
Tokyo's CPI leads the national figure by about three weeks, so a core-core reading of 3.0% against a 2.5% forecast strengthens the case that price pressure in Japan has broadened well past the BOJ's 2% comfort zone, even after this month's hike. That raises the odds the central bank leans into a faster tightening path, particularly given Governor Ueda's past refusal to rule out larger or more frequent increases. For US markets the link is indirect: a quicker pace of Japanese rate rises keeps pressure on the yen-funded carry trade that has helped anchor global rate differentials through this cycle.