Japan's core consumer price index (CPI) remained steady at 3% in November, matching market expectations and maintaining pressure on the Bank of Japan (BoJ) ahead of its critical monetary policy meeting. The data comes as central bankers contemplate raising interest rates to their highest level in three decades.
While the core CPI (excluding fresh food) held at 3%, rice prices surged by 37% year-on-year due to supply chain issues and previous climate impacts.
Economists predict the BoJ may raise the main interest rate from 0.5% to 0.75%.3 If implemented, this would be the highest borrowing cost since 1995.
Bond yields have risen amid concerns over Prime Minister Sanae Takaichi’s fiscal discipline, while the yen continues to show weakness.
PM Takaichi recently secured approval for an 18.3 trillion yen ($118 billion) extra budget to fund a massive stimulus package aimed at fighting inflation.
Despite her history of advocating for easy monetary policy, Takaichi has stated that interest rate decisions remain solely at the discretion of the BoJ.
Governor Kazuo Ueda noted that while US tariffs remain a concern, their impact has been "less than feared" as US corporations have largely absorbed the costs rather than passing them to consumers.
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