Japanese inflation slowed to 2.6 percent in March, in line with market expectations, data showed Friday. The year-on-year rise in prices excluding volatile fresh food followed a 2.8 percent February increase, partly due to lower gas bills. Prices rose 2.9 percent when fresh food and energy were stripped out, slightly lower than market expectations. The Bank of Japan (BoJ) has been implementing aggressive monetary stimulus policies to generate rising prices after years of deflation. Last month, the BoJ hiked borrowing rates for the first time since 2007 and scrapped the negative interest rate. The BoJ is expected to hike inflation forecasts at its upcoming meeting, but economists anticipate that interest rates will remain unchanged for now.
The yen’s recent depreciation to a 34-year low against the dollar has raised concerns. Japanese Finance Minister Shunichi Suzuki stated that the rate difference is not the only factor contributing to the yen’s decline. Suzuki and his South Korean counterpart issued a joint statement expressing concerns about the weakness of their currencies and agreed to take appropriate actions if necessary. Japan’s government last intervened in markets to support the yen in October 2022, spending 6.3 trillion yen on forex intervention operations.
