BOJ Rate Hike Bets Firm Up as Japan Wholesale Inflation Remains Elevated

Japan's wholesale inflation remained high in August, according to the Bank of Japan (BOJ) data released on Friday. The producer price index climbed 7.6% in August compared with a year earlier, exceeding a median market forecast of a 7.4% rise.

This comes after the BOJ recently adopted hawkish language, prompting markets to almost completely factor in a rate increase to 1.25% from 1% at next week's policy gathering. BOJ Governor Kazuo Ueda has stated that the central bank was monitoring wholesale inflation closely for signals about how far companies could transfer costs to households.

The yen-denominated import price index advanced 24.8% in August from a year earlier, after a revised 29.3% jump in July. Higher fuel costs stemming from the Middle East conflict and increased import prices caused by a weak yen have intensified price pressure on the economy.