BOJ Rate Hike Nears as Japan's Core Inflation Accelerates

Japan's core consumer inflation accelerated in July to 1.8% year-over-year, matching market expectations, as businesses passed on rising import costs due to a weak yen and tensions from the US-Israeli war on Iran.

The data comes ahead of the Bank of Japan's next policy meeting on September 17-18, where it is widely expected to raise interest rates to 1.25% from the current 1%.

Analysts point out that core inflation has remained below the BOJ's 2% target for seven consecutive months due in part to government subsidies aimed at curbing fuel costs.

However, with the Middle East situation escalating and crude oil prices expected to rise, many believe core inflation will accelerate above the BOJ's target in the coming months.