Analyst: Higher-than-expected core inflation in Japan sparks rate hike debate, may have impact on crypto market

BlockBeats News, 21 March - Just as the yen panic seems to be easing, Japan has released core inflation data that rose again, CoinDesk analyst James Van Straten said. Data released early Friday morning showed Japan's core inflation rose 3% year-on-year in February, down from 3.2% in January but above the market's general expectation of 2.9%. Meanwhile, the headline consumer price index (CPI) fell to 3.7% from 4%.

Overall, both indicators remain well above the BOJ's 2% inflation target, confirming Governor Haruhiko Kuroda's judgement that Japan is emerging from decades of deflation. It is worth noting that Japan's headline inflation has been higher than that of the US since November last year, and is now nearly 100 basis points (bps) higher.

Continued high inflation, coupled with rising wages, has further fuelled market calls for a rate hike by the BoJ. In other words, the risk of a yen rally that could trigger volatility in risk assets, including cryptocurrencies, has resurfaced.