🇯🇵❗️Cable FX Macro Weekly Note: Japan Consumer Prices

**As seen in Risk In The Week report 10/17/25, get full access now!

Inflation remains above the Bank of Japan's (BOJ) 2% target for over three years, driven by rising food and energy costs, wage pass-through, and a weak yen, but has shown signs of moderation. Headline CPI eased to 2.7% year-over-year (y/y) in August, while core measures (excluding fresh food) hovered around 2.8%. Analysts expect a modest reacceleration in September to ~2.9% core CPI y/y due to sustained living cost pressures. Headline CPI is seen at 2.8% y/y. Key factors: Persistent food inflation (e.g., rice shortages) and labor costs, though subsidies and stabilizing energy may cap gains. BOJ Governor Kazuo Ueda noted the data will be scrutinized at the October 29–30 meeting for rate decisions.

Bank of Japan Governor Kazuo Ueda said a potential interest rate hike in October will depend on a careful review of upcoming economic data, Reuters news reported. Overnight indexed swaps priced in 20% of an October rate hike, this is up from last week’s read.