Tokyo’s November CPI data pointed to resurgence of inflation pressures in Japan, raising expectations for BoJ to tighten policy further.
Tokyo Core CPI, excluding food, climbed from 1.8% yoy to 2.2% yoy, beating expectations of 2.1%, driven largely by the reduction in energy subsidies.
Core-core CPI, excluding food and energy, edged higher from 1.8% yoy to 1.9% yoy from 1.8%. Services prices, a key indicator of domestic demand-driven inflation, also increased, rising from 0.8% yoy to 0.9% yoy.
Headline CPI surged significantly, jumping from 1.8% yoy to 2.6% yoy.
This inflation data has heightened market anticipation of a policy change from BoJ. Overnight swaps now indicate over 60% probability of a rate hike at the December meeting. Meanwhile, more than 80% of economists surveyed recently forecasting an adjustment by January.
With the BoJ’s current policy rate at 0.25%, the decision appears imminent, likely within the next two months.
