The Bank of Japan meeting concluding May 1 is a ‘live’ meeting, with much speculation that the Bank could raise riates given rising food prices.

Reuters carry the article, which is more or less an opinion piece, but its does cite other analysts, and makes pertinent points.

In brief:

• growing signs of sticky food inflation, which adds to prospects of sustained wage increases, will likely keep the BOJ on course to raise rates
• the BOJ can incorporate to some extent the potential impact from Trump tariffs in its quarterly outlook report due at its next meeting on April 30-May 1, Ueda said, signalling a rate hike at the meeting cannot be completely ruled out even though current consensus is for a tightening to occur around the third quarter
• “The BOJ doesn’t have control over supply shocks like rising food prices, but what’s important is how long this will last,” said a source familiar with the bank’s thinking.

  “If it persists, it could materially change the way people see future price moves and justify rate hikes,” another source said on rising food costs.”

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Food prices have been a major driver of inflation in Japan, with core inflation hitting 3.0% in February and rice prices soaring more than 80% year-on-year. Despite modest services inflation and stable long-term inflation expectations, the BOJ is becoming more vocal about the need to act if inflation risks intensify, particularly if food-driven price gains start anchoring higher expectations.