By Leika Kihara and Takahiko Wada
TOKYO (Reuters) – Japan’s core consumer inflation re-accelerated in June and stayed above the central bank’s 2% target for the 15th straight month, data showed on Friday, adding to recent signs of broadening price pressures.
The data comes ahead of the Bank of Japan’s closely watched policy meeting next week, when the board will produce fresh quarterly forecasts and debate whether conditions are falling into place to begin phasing out the bank’s massive stimulus.
The nationwide core consumer price index (CPI), which excludes fresh food costs, rose 3.3% in June from a year earlier, matching a median market forecast. It followed a 3.2% gain in May.
So-called “core core” inflation, which strips away both fresh food and fuel costs, stood at 4.2% in June after a 4.3% rise in May, the data showed.
As inflation perks up, markets are simmering with speculation the BOJ could soon phase out its controversial yield curve control (YCC) policy that is criticised for distorting market pricing and narrowing margins for financial institution.
BOJ Governor Kazuo Ueda’s remarks on Tuesday that Japan was still distant from sustainably achieving the bank’s 2% target have pushed down the yen and boosted Japanese shares, as investors scaled back bets of a near-term tweak to YCC.
Under YCC, the BOJ guides short-term interest rates at -0.1% and buys huge amounts of government bonds to cap the 10-year bond yield around 0% as part of efforts to fire up inflation to its 2% target.
(Reporting by Leika Kihara and Takahiko Wada. Editing by Sam Holmes.)
