Japan’s inflation continues to rise in May as the BOJ maintains ultra-loose monetary policy

Reuters reported today that Japan’s consumer price index (CPI) is expected to rise 2.1% year on year in May 2022. This would be the second consecutive month in which inflation exceeds the Bank of Japan’s 2% target.

“Although there was a lull in the growth of energy costs due to an expansion of subsidies and a peaking out of recent fuel prices gains, increases in food product prices likely drove consumer prices higher,”

said a group of analysts at Mizuho Research and Technologies.

Core CPI, which excludes fresh food prices but includes energy costs, rose 2.1% in April. This is the first time in seven years that inflation has been above the BOJ’s target.

The BOJ left its interest rates at -0.1% at today’s meeting and kept its target for the yield on 10-year government bonds at around 0%. This underlines the BOJ’s ultra-loose monetary policy. The BOJ’s monetary policy series continues as other central banks around the world raise interest rates to contain inflation and send the yen plummeting.

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