Japan's core inflation slows below 3% for first time in over a year

• Sept core consumer prices up 2.8% yr/yr vs f'cast +2.7%Core-core index up 4.2% yr/yr in Sept - govtData among factors to come under scrutiny at BOJ's Oct meeting

TOKYO, Oct 20 (Reuters) - Japan's core inflation in September slowed below the 3% threshold for the first time in over a year but stayed above the central bank target, keeping alive expectations that policymakers will phase out ultra-easy monetary policy.

The data will be among indicators the Bank of Japan (BOJ) will scrutinise at its two-day policy meeting ending on Oct. 31, when it will produce fresh quarterly growth and price forecasts.

"While inflation weakened in September, we think inflation will only fall below the BoJ's 2% target by the end of next year," said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

The nationwide core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.8% in September from a year earlier - the first time it has slowed below 3% since August 2022, government data showed on Friday. It eased from 3.1% in August.

All the same, the rate has tracked above the BOJ's 2% target for 18 straight months.

The core-core index, which strips away fresh food and fuel costs, rose 4.2% in September from a year earlier, the data showed, slowing from a 4.3% gain in August.

Markets are rife with speculation the BOJ will soon end negative short-term interest rates and yield curve control, which sets a 0% cap for the 10-year bond yield, in response to broadening inflationary pressure. The BOJ has played down the near-term chance of phasing out its massive stimulus, arguing the recent cost-driven price rises need to change into demand-driven increases in inflation for the bank to consider hiking interest rates.

https://www.reuters.com/markets/asia/japans-core-inflation-slows-below-3-first-time-over-year-2023-10-20/

https://tradingeconomics.com/japan/government-bond-yield

NEVER raising rates and said that before the Fed started. They own about 70% of it’s own JGBs (by now) and prolly north of 80% of all equities in the Japanese Indicies. As recently as Oct 2 they vaporized muh yen (while they were selling US Treasuries along with China and EU countries) to the tune of around $60b in the latest of its (instead of raising rates) “Yield Control” policy they will never abandon. You wanna know why the yield curve is inverted? THIS is where it began as they are the top holder of our debt and surpassed China during 45s assault on Chinese trade policies.