Japan's Inflation Data Sparks Doubt Over Bank Rate Hike

Japan's Consumer Price Index (CPI) data for August fell short of expectations across the board, casting doubt on whether the Bank of Japan will deliver a hawkish rate hike as widely anticipated.

The nationwide CPI rose 1.9% year-on-year, below the expected 2.0%, and unchanged from July's figure. Core CPI, excluding fresh food, increased 1.7% year-on-year, also missing forecasts at 1.8%

The core-core CPI, which excludes both fresh food and energy, rose by just 1.7%, significantly below the market consensus of 2.0%. This gap between core indicators and expectations is particularly striking.

Despite the rate hike still being largely priced in, the yen weakened modestly after the data release, with USD/JPY edging higher to around 156.15.