BOJ Rate Hike Case Strengthened by Tokyo Inflation Data

Tokyo's inflation data has strengthened the case for a Bank of Japan rate hike as soon as its September 17-18 meeting.

The core-core gauge, closely watched by the BOJ, rose to 2.0% in August, just 2 basis points shy of an even rounder milestone above target.

This reading comes alongside a sharp acceleration in wholesale inflation to 7.2% in July, indicating that Middle East related cost pressures are still working their way through the pricing chain with a lag.

The BOJ may consider a more aggressive hiking pace than its recent twice-yearly cadence, and this data adds another point supporting near-term policy tightening.