The Yen

Japanese CPI Outlook and BoJ's Focus.

Anticipated for Friday, the National Core CPI Y/Y for October is expected to rise to 3.0% from the previous 2.8%. Non-Core Y/Y was previously at 3.0% with a M/M of 0.3%.

Last month marked the first time in over a year that the core Y/Y rate fell below 3%. The BoJ's latest projections show core inflation reaching 2.8% this year, up from the prior 2.5% estimate in July, and projecting 2.8% in 2024 (previously 1.9%), before slowing to 1.7% in 2025 (previously 1.6%).

The BoJ emphasizes the importance of the June 2024 spring wage talks. Rengo, Japan's largest trade union body, plans to set a wage hike target of '5 per cent or higher' for the upcoming negotiations. PM Kishida urges the business community to raise wages in next year's spring talks. BoJ Governor Ueda, on November 2nd, indicated a focus on ending NIRP and shifting short-term rates to 0 from the current -0.1%, with a potential move in Spring during annual wage negotiations.

Analysts at ING project the October headline inflation to increase to 3.3% from 3.0%, citing drivers such as fresh food and energy prices. They expect core inflation to remain above 4.0%, potentially nudging the Bank of Japan's policy stance more towards neutrality from ultra-easing bias.

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