Japan’s core CPI rose to 1.8% in July, lifting expectations for a Bank of Japan rate hike in September to 82%.
The EUR/JPY cross softened to 185.60 in early European trading Monday, pressured by a stronger Japanese Yen. Japan’s core Consumer Price Index climbed 1.8% year-over-year in July, up from 1.6% in June, reinforcing expectations for tighter monetary policy by the Bank of Japan.
Markets now price an 82% chance of a September rate hike, up sharply from 23% before the BoJ’s July meeting. Headline inflation hit 1.9% in July, the highest this year, while core CPI, excluding fresh food, accelerated for the second consecutive month.
Traders await remarks from BoJ Deputy Governor Ryozo Himino on Thursday, which could provide clues on the pace of future hikes. Analysts suggest the data supports a gradual normalization path, though Societe Generale maintains its call for a September move.