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Japan’s Wholesale Inflation Hits 4.0% in February, Fueling Rate Hike Expectations

Japan’s Wholesale Inflation Hits 4.0% in February, Fueling Rate Hike Expectations. Source: Basile Morin, CC BY-SA 4.0, via Wikimedia Commo

Japan’s annual wholesale inflation reached 4.0% in February, reflecting rising raw material costs and reinforcing market expectations of a near-term interest rate hike by the Bank of Japan (BOJ). The corporate goods price index (CGPI), which tracks the prices businesses charge each other, matched market forecasts but slowed slightly from January’s 4.2% increase.

Bank of Japan data showed yen-based import prices declined 0.7% in February after rising 2.3% in January, highlighting fluctuating cost pressures. The BOJ had ended its decade-long ultra-loose monetary policy last year, raising short-term interest rates from 0.25% to 0.5% in January, signaling a shift toward tightening.

With consumer inflation surpassing the BOJ’s 2% target for nearly three years, policymakers have indicated a willingness to raise rates further if economic recovery remains stable. Investors are closely watching for signals on future monetary policy moves, as sustained inflation and economic resilience could prompt additional hikes.

Japan’s inflation trend continues to shape expectations for financial markets, businesses, and households. The BOJ’s stance on interest rates remains a focal point, with any further increases likely to impact lending, investment, and overall economic growth.

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