Japan core CPI holds at 3.0% in November, reinforcing BoJ outlook

Japan's November inflation data showed core consumer prices rising 3.0% year-on-year, matching market expectations. This reinforces expectations for the Bank of Japan's gradual path towards policy normalization and supports the case for a potential rate hike, pushing the policy rate to the highest level in about three decades. The overall CPI increased by 2.9% year-on-year, underscoring persistent price pressures despite volatility in energy markets and a modest slowdown in global growth. Despite the underlying inflation pressures being supported by domestic factors, the Bank of Japan is likely to remain cautious due to rising government bond yields and the sensitivity of financial conditions to further tightening.