Japan GDP Steady, Inflation Set to Hit BoJ Target

Japan's economic growth is expected to remain steady in the second quarter of this year. According to market consensus, the country's preliminary Q2 Gross Domestic Product (GDP) will hold at 0.5% quarter-on-quarter. This means that private consumption will continue to be the main driver of growth.

The Bank of Japan (BoJ) is closely watching the inflation rate in the country. The market expects a moderate increase in headline and core Consumer Price Index (CPI) on August 21, with readings of 2.0% and 1.8% year-on-year respectively. This would return national headline inflation to the BoJ's 2% target for the first time in recent months.

The projected acceleration in headline inflation is primarily driven by persistent import price pressures. The Bank of Japan has been keeping a close eye on inflation, and this latest forecast suggests that it may be getting closer to its target.