BOJ’s underlying inflation measures in April all fall below 2%

By Thomson Reuters May 28, 2024 | 12:48 AM

By Leika Kihara and Takahiko Wada

TOKYO (Reuters) – The Bank of Japan’s key measurements of underlying inflation in April all fell below its 2% target for the first time since August 2022, data showed on Tuesday, heightening uncertainty on the timing of its next interest rate hike.

The weighted median inflation rate, among the three indicators closely watched as a gauge on whether price rises are broadening, rose 1.1% in April from a year earlier after a 1.3% gain in March, the data showed.

The trimmed mean index, which excludes the upper and lower tails of the price change distribution, rose 1.8% in April from a year earlier, slowing from the previous month’s 2.2%, the data showed.

A third index that measures the inflation rate with the highest density in the distribution also rose 1.6% in April, slowing from the previous month’s 1.9% gain, it showed.

The BOJ ended eight years of negative interest rates and other remnants of its radical monetary stimulus in March on the view that sustained achievement of its 2% inflation target has come into sight.

BOJ Governor Kazuo Ueda has said the central bank will raise interest rates from current near-zero levels if underlying inflation accelerates toward 2% as it currently projects.

The data cast doubt on the BOJ’s view that price rises are broadening beyond those driven by rising raw material costs, and likely to be sustained backed by robust domestic demand.

(Reporting by Leika Kihara and Takahiko Wada; Editing by Jacqueline Wong)