Inflation gauge closely tracked by the Bank of Japan jumps to seven-month high | Wilnesh News

Japan’s inflation gauge, closely watched by the Bank of Japan (BOJ), hit a seven-month high in November, which could prompt the central bank to raise interest rates early next year.

The so-called “core-to-core” inflation rate, which excludes prices for fresh food and energy, is tracked by the Bank of Japan. rose from 2.3% to 2.4%the highest level since April.

Core inflation, which excludes fresh food prices, was 2.7%, up from 2.3% in October and exceeding the 2.6% forecast by economists polled by Reuters.

Headline inflation rose to 2.9% from 2.3%, reaching the highest level since August.

The data came a day after the Bank of Japan held interest rates steady at 0.25%, surprising economists who had expected a 25 basis point hike.

The Bank of Japan said in a statement on Thursday that it made the decision to keep interest rates unchanged by an 8-1 split, with board member Naoki Tamura advocating a 25 basis point interest rate hike.

Tamura believes that inflation risks have become more tilted to the upside and proposed that the bank raise interest rates during the meeting.

Bank of Japan Governor Kazuo Ueda reportedly said at a news conference on Thursday that the Bank of Japan may raise interest rates slowly as underlying inflation is growing only at a “moderate pace.”

However, Ueda did add that the central bank is mindful that if it takes too long to raise rates, it will have to increase the pace of rate increases at future meetings.

Marcel Thieliant, head of Asia Pacific at Capital Economics, said in a statement after the decision that the Bank of Japan “will soon resume its tightening cycle.” Capital Economics expects a rate hike in January following the release of a series of new economic forecasts.

“It’s worth noting that unlike October, the decision to keep rates on hold was not unanimous,” Thieliant added, noting that Tamura voted to raise rates to 0.5%.