The BOJ has announced that it will begin publishing data on the estimated core consumer price inflation (CPI) rate, so as to better capture developments and trends in prices. It says that the data will be published under the "Indicators for Core CPI", coming with the following measures:
- CPI that excludes "institutional factors"
- Trimmed mean
- Weighted median
- Mode
- Diffusion index of increasing/decreasing items
The first such release comes today and can be found here.
And no surprises there, that the numbers do fit with the BOJ view and outlook that core inflation remains well above the 2% threshold and supports their narrative for another interest rate increase.
For some context, the BOJ had come under quite a bit of scrutiny - not least from the government - as Japan's inflation data had become a bit noisy. That as the supposed official core CPI reading shows a drop back below the crucial 2% level here. Yet, the BOJ seems adamant to want to keep pursuing tighter monetary policy.
In order to address that contradiction, the BOJ wants to show evidence that real underlying inflation pressures remain robust. In their view, the Japanese government measures such as energy subsidies are leading to artificially lower CPI figures.
So, in a sense the publication that the BOJ is now releasing will be a "clean" read on the inflation numbers. And it is more of a case to justify to the public and also to markets that they are on the right path in terms of monetary policy still.
If anything, this can also be read as a bit of a pushback by the BOJ against the government's wishes. As a reminder, Japan prime minister Takaichi and her administration wants the BOJ to leave interest rates as they are amid her more expansionary fiscal policy.
