ING says Japan’s March CPI beat forecasts and inflation will accelerate further, complicating the BoJ’s rate decision on April 28 and keeping an April hike on the table despite market consensus for a hold.
ING says Japan’s March CPI beat forecasts and inflation will accelerate further, complicating the BoJ’s rate decision on April 28 and keeping an April hike on the table despite market consensus for a hold. Earlier previews with a conflicting view: Preview: BOJ expected to stay on hold next week but deliver hawkish signal on June move BOJ may lean more hawkishly to ease pressure on the yen – Nomura Note, Bank of Japan Governor Ueda will not physically attend the meeting.
Ueda will attend by phone due to health reasons. Summary Japan headline CPI rose 1.5% year-on-year in March, above the 1.4% market consensus and up from 1.3% in February Core CPI excluding fresh food accelerated for the first time in five months to 1.8%, beating the 1.5% consensus Excluding government energy subsidies and social welfare effects, inflation is running well above 2% ING expects Tokyo CPI to rise to 1.7% year-on-year in April, with both headline and core inflation seen climbing back above 2% from May Shunto wage negotiations delivered growth above 5%, with small and medium enterprise increases also firm ING expects the BoJ’s FY2026 inflation forecast to be revised up sharply from 1.9% to 2.4%, and FY2027 from 2.0% to 2.2% GDP outlook expected to be trimmed from 1.0% to 0.7% for FY2026, but still seen above potential Markets widely expect the BoJ to hold on April 28; ING maintains a non-consensus call for a possible hike If BoJ holds, ING expects communication to strongly signal a June hike ING has 50 basis points of hikes pencilled in by end of 2026 Japan’s inflation is running hotter than expected and broadening across the economy, putting the Bank of Japan in an increasingly uncomfortable position ahead of its rate decision on Tuesday and keeping alive the possibility of a surprise hike that markets have largely dismissed. Headline consumer price inflation rose 1.5% year-on-year in March, above both the 1.4% market consensus and the 1.3% recorded in February, according to ING.
Core…