UBS on the CPI data from Japan yesterday:
- Japan’s January consumer price inflation data slowed, but the slowdown was less marked in services.
- This was because of foreign holiday prices—Japanese consumers are following the developed economy trend of prioritizing fun.
- The drivers of inflation numbers are relatively few, making a sudden rate increase by the Bank of Japan unlikely, but the modest nature of the inflation slowdown keeps alive prospects for a later rate increase.
While I concur with UBS on the inflation data pointing to no near term rate increase from the BOJ I am wary of behind the scenes political pressures on the Bank that force their hand.
This article was written by Eamonn Sheridan at www.forexlive.com. Source