The Bank of Japan will release a new inflation indicator every month, possibly aimed at providing a basis for its interest rate hike stance

The Bank of Japan announced that starting this month, it will release monthly indicator data used to assess core CPI. The relevant data will be published under the name "Core CPI Reference Index" and will be announced at 14:00 on the second business day after the official CPI release in Japan.

Investinglive analyst Justin Low stated that, in context, the Bank of Japan has faced considerable criticism due to the somewhat chaotic inflation data in Japan. The core CPI year-on-year rate for February has fallen below the critical 2% level, yet the Bank of Japan seems determined to continue implementing a tightening monetary policy. The Bank hopes to provide evidence that actual underlying inflationary pressures remain strong. It believes that measures such as energy subsidies implemented by the Japanese government have artificially suppressed CPI data.

Therefore, the "Core CPI Reference Index" now released by the Bank of Japan will serve as a "denoised" interpretation of the inflation numbers. This is more about demonstrating to the public and the market that they are still on the right path regarding monetary policy. If there is any difference, it can also be interpreted as a slight resistance from the Bank of Japan to the government's intentions, as Prime Minister Sanae Takaichi hopes the Bank of Japan will maintain the current interest rates.