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2d ago

BOJ Readies Further Rate Hikes as Food Costs Push Core Inflation to 3.5%

Rising food costs threaten to push underlying inflation above the BOJ’s 2% goal with further rate hikes on hold until data offers greater certainty.

Bank of Japan Governor Kazuo Ueda attends a press conference after a BOJ policy meeting in Tokyo, Japan, May 1, 2025. REUTERS/Kim Kyung-Hoon/File Photo

Overview

  • Japan’s core inflation accelerated to 3.5% in April, led by a 7% jump in food prices and a 90% spike in rice costs.
  • Governor Kazuo Ueda warned that supply-side shocks from rising food expenses could undermine progress toward the BOJ’s inflation target.
  • The central bank wound down its decade-long stimulus last year and raised short-term rates to 0.5% in January 2025.
  • Ueda said the BOJ stands ready to tighten policy further if incoming economic data bolster confidence in its growth and inflation outlook.
  • A Reuters poll found most economists expect interest rates to remain unchanged through September, with a small majority forecasting a hike by year-end.