FX.co ★ Tokyo Core Inflation Slows More Than Expected

In January 2026, central Tokyo's core consumer prices experienced a year-on-year increase of 2%, a slowdown from the 2.3% rise seen in December, falling short of the anticipated 2.2%. This represents the lowest growth rate since October 2024 and aligns precisely with the Bank of Japan's targeted inflation rate of 2%. This scenario strengthens the belief that the central bank will continue to tread carefully regarding further interest rate hikes. Despite its cautious stance, the Bank of Japan has consistently indicated a willingness to adjust borrowing costs if economic conditions and inflation projections justify such measures. After raising its policy interest rate to a three-decade peak of 0.75% in December, the bank opted to maintain this rate in January.