Reuters: Bank of Japan may hike rates in May due to food inflation in country

The Bank of Japan's meeting last week passed without any surprises. However, the bank's messages about the need to remain vigilant regarding inflationary pressures are important for market participants. The interest rate may be raised sooner than expected. This was reported by Reuters.

The US administration's trade policy has raised uncertainty about the future strategies of central banks around the world, and the monetary authority of Japan is no exception. The regulator's officials are taking a cautious approach to any changes in financial policy, trying to assess the implications of the introduction of US tariffs, the agency notes.

In February, core inflation in the country hit 3.0% as food prices jumped by 5.6% year-on-year. According to experts interviewed by Reuters, this circumstance may justify a rate hike by the Bank of Japan as early as May.

On the other hand, the increase in wages has not yet led to an acceleration of inflation in the services sector. In January, the rate was at 1.3%. Long-term inflation expectations also showed no significant deviation of the consumer price index from the Bank of Japan's target level of 2%.