Japan’s inflation rate surged to a 2-year high of 4% in January, surpassing expectations and fueling calls for interest rate hikes from Bank of Japan (BOJ) members. This marks the highest level since January 2023.
Core inflation, which excludes food prices, jumped to 3.2%, its highest since June 2023, beating economists’ forecasts of 3.1%. The BOJ’s “core-core” inflation rate, excluding energy and fresh food prices, rose slightly to 2.5%.
The strong inflation data supports the BOJ’s tightening efforts, with Governor Kazuo Ueda warning of potential risks from overly high expectations of continued monetary easing. The central bank has been hinting at further interest rate hikes to curb inflation.
The yen strengthened against the dollar after the data release, while 10-year Japanese government bond yields fell to 1.402%, following a sharp rise in anticipation of rate hikes. Some analysts predict that the BOJ will hike rates again soon, citing strong economic growth data and growing concerns over inflation risks.
Source: https://www.cnbc.com/2025/02/21/japans-inflation-rate-climbs-to-4percent-in-january-highest-in-two-years.html