Japan’s core consumer inflation re-accelerated in June and stayed above the central bank’s 2 percent target for the 15th straight month, data showed on Friday, adding to recent signs of broadening price pressures.
Services prices, closely watched by policymakers on whether inflation is becoming driven more by higher labor costs, rose 1.6percent in June from a year earlier after a 1.7-percent gain in May.
But so-called “core core” inflation, which strips away both fresh food and fuel costs, slowed 4.2percent in June from a 4.3-percent rise in May, a sign the rapid pace of increase seen in the past few months was moderating. As inflation perks up, markets are simmering with speculation the BOJ could soon phase out its controversial yield curve control policy that is criticized for distorting market pricing and narrowing margins for financial institution.
BOJ Governor Kazuo Ueda’s remarks on Tuesday that Japan was still distant from sustainably achieving the bank’s 2 percent target have pushed down the yen and boosted Japanese shares, as investors scaled back bets of a near-term tweak to YCC. Under YCC, the BOJ guides short-term interest rates at -0.1percent and buys huge amounts of government bonds to cap the 10-year bond yield around 0 percent as part of efforts to fire up inflation to its 2 percent target.Subscribe to our daily newsletter
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