FX.co ★ Japan Core Inflation Slows for 3rd Straight Month

Japan's core consumer price index, which factors in energy costs but excludes fresh food, saw a year-on-year increase of 2.7% in August 2025. This marks a moderation for the third consecutive month, reaching its lowest point since November 2024. Despite this, core inflation remains above the Bank of Japan’s 2% benchmark, bolstering expectations for a potential rate hike later in the year. The central bank is largely predicted to maintain its current stance at the September meeting, given the economic challenges both domestically and internationally, particularly from U.S. tariffs. Nevertheless, market forecasts suggest a potential 25 basis point increase in October, amid signs of economic durability. BOJ Governor Kazuo Ueda continues to exercise caution, noting that "underlying inflation" has not yet consistently aligned with the 2% goal.