Tokyo inflation slowdown, output slide clouds BOJ's rate hike outlook
© Reuters. FILE PHOTO: A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. REUTERS/Androniki Christodoulou/File photoTOKYO -Core inflation in Japan's capital slowed in March and factory output unexpectedly slid in the previous month, heightening uncertainty on how soon the Bank of Japan can raise interest rates again after exiting its radical monetary stimulus.
While core inflation is still above the central bank's 2% target, the slowdown underscores how price pressures in Japan are still predominantly coming from raw material costs rather than robust domestic demand. The data may point to caution at the BOJ in implementing further interest rate hikes, after ending an eight-year negative interest rate policy last week.
Big firms have offered bumper pay hikes in this year's annual wage negotiations, heightening the prospect that Japan will see inflation sustained around the BOJ's 2% target.
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