Japan Inflation Slowdown and BoJ Rate Hike Outlook

Japan's headline inflation slowed to 1.4% in April due to government subsidies, but ING expects the Bank of Japan to hike rates in June regardless.

Key Takeaways

• 1.Japan's headline inflation unexpectedly slowed to 1.4% YoY in April, largely due to government energy subsidies.
• 2.The Bank of Japan is still expected to proceed with a rate hike in June despite the soft inflation reading.
• 3.Resilient 1Q26 GDP and firm export outcomes support the case for the BoJ's tightening stance.

Table of Contents

• Energy subsidies and waivers led to soft inflation print
• Government's social welfare programs lowered service prices in April
• BoJ watch
• Author
• Disclaimer

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