FX.co ★ Japan Core Inflation Hits 14-Month Low

In December 2025, Japan's core consumer price index—which excludes fresh food but incorporates energy—grew by 2.4% year-on-year. This is a slowdown from the 3% increase recorded in November and represents the slowest growth rate since October 2024. This data aligns with market expectations and precedes the Bank of Japan's anticipated policy decision. It is widely expected that the central bank will maintain interest rates at their current level following the December rate hike. Despite this, market speculation continues about a possible rate increase later in the year, potentially as soon as June. Governor Kazuo Ueda of the Bank of Japan has consistently emphasized that the bank is ready to further tighten monetary policy if economic activity and inflation unfold according to projections. However, the situation has been complicated by Prime Minister Sanae Takaichi's decision to call snap elections in an attempt to strengthen her political position and push forward expansionary fiscal policies, such as the proposed reduction of the 8% sales tax on food. This move has sparked concerns regarding Japan's fiscal direction.