Japan’s July inflation at 1.9% and robust PMI readings fuel speculation of an earlier Bank of Japan rate increase.
Japan’s July inflation climbed to 1.9%, aligning with the Bank of Japan’s 2% target, while core inflation excluding food and energy also held steady. The data suggests price dynamics no longer block a potential rate hike, even as soon as September’s policy meeting on the 18th.
Manufacturing PMI rose to 55.1, and services PMI improved to 52.3, signaling continued economic momentum. While the BoJ is still expected to act in Q4, the latest figures reduce barriers to an earlier move, keeping policy risks elevated for the JPY.
Markets are now weighing the likelihood of a September hike, though consensus remains tilted toward a later adjustment.