Japan's core CPI growth rate slowed down in September, and the Bank of Japan is expected to stand pat at the end of this month

Zhitong
2024.10.18 00:32
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Japan's national core CPI in September rose by 2.4% year-on-year, lower than the previous value of 2.8%, marking the first slowdown in five months. The Bank of Japan is expected to keep the benchmark interest rate unchanged at 0.25% in the rate decision on October 31st. Market participants are now delaying their expectations for the next rate hike until January next year. Bank of Japan board member Adachi Seiji emphasized the need for a gradual rate hike to maintain a loose financial environment. Economists believe that the Bank of Japan will observe the performance of the U.S. economy before further rate hikes

According to the Zhitong Finance and Economics APP, Japan's main inflation indicators slowed down in September for the first time in five months. Data released by the Japanese Ministry of Internal Affairs on Friday showed that Japan's national core CPI, excluding fresh food, rose by 2.4% year-on-year in September, lower than the previous value of 2.8%, but slightly higher than the market's expectation of 2.3%; Japan's national CPI rose by 2.5% year-on-year in September, lower than the previous value of 3%.

The slowdown in this inflation indicator in Japan is largely due to government utility subsidies. Therefore, if there are no other signs indicating a weakening inflation trend, this may have limited impact on the Bank of Japan's policy path.

At the same time, the inflation index excluding energy costs and fresh food prices rose by 2.1% year-on-year, higher than the previous value of 2.0%; service prices, which are considered a key indicator by the Bank of Japan to test price trends, rose by 1.3% year-on-year in September, lower than the previous value of 1.4%.

The Bank of Japan will announce its latest interest rate decision on October 31. The market currently generally expects the Bank of Japan to maintain the benchmark interest rate at 0.25%. After Japanese Prime Minister Shizo Abe stated earlier this month that "the Japanese economy is not ready for another rate hike by the Bank of Japan," some market participants have postponed expectations for the Bank of Japan's next rate hike to January next year.

Bank of Japan board member Seiji Adachi said on Thursday that in the process of gradually raising interest rates, it is necessary to be cautious and to raise rates as slowly as possible while maintaining loose financial conditions until the trend reaches 2%. Adachi Seiji emphasized the need to gradually raise the benchmark interest rate, and his remarks may reinforce the market's view that the Bank of Japan will stand pat at this month's policy meeting.

The Bank of Japan has consistently maintained its position that if inflation developments align with its forecasts, it will further reduce monetary easing policies and raise interest rates. Economist Taro Kimura said, "The Bank of Japan is watching the performance of the U.S. economy before further raising interest rates. We believe that the Bank of Japan will be able to confirm a soft landing of the U.S. economy before the policy meeting in January next year."

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