CPI acceleration intensifies pressure on BOJ’s next move

Reuters reports that Japan’s inflation accelerated in March. The core consumer price index, which excludes fresh food but includes energy costs, increased 3.2% from a year earlier. This figure matched forecasts and showed an increase from 3% in February. Core inflation has consistently exceeded the Bank of Japan's 2% target for three straight years.

According to the agency, this persistent inflation trend complicates the financial regulator’s policy decisions. The Bank of Japan faces the challenge of balancing rising prices against economic risks linked to US tariffs. At its April 30–May 1 meeting, the central bank is expected to keep rates steady at 0.5%, likely postponing any rate hikes due to global trade uncertainties.

Japan's Finance Minister Kato and BOJ Governor Ueda have expressed concern over the impact of US tariffs on Japan’s economic health. Although some planned duties have been delayed by 90 days, others remain in effect. These import restrictions, combined with stubbornly high inflation, pose challenges for Japan’s economy and complicate the outlook for monetary policy.