Tokyo CPI preview: core inflation seen jumping to 2.4% as BOJ weighs its next hike

A Tokyo core print at or above 2.4% would reinforce expectations of a follow-up BOJ hike and could support the yen and push short-dated Japanese government bond yields higher, while a miss would give weight to the two board members who argued against the September increase. Because Tokyo leads the national figures by about three weeks, traders tend to read it as a preview of the nationwide trend. For oil, the link runs through import costs: higher crude prices tied to Middle East tensions have been one of the forces lifting Japanese prices, so any further energy spike would add to the BOJ's inflation concern. The jobs data is unlikely to move markets unless it surprises materially, with a tight labour market already assumed. Two weeks after hiking, the BOJ is about to find out whether Tokyo prices back its decision, with forecasts pointing to core inflation leaping well beyond target. Summary: Tokyo core CPI (ex fresh food) for September is forecast at 2.4% y/y, up from 1.8% in August; release at 2330 GMT Prior readings: headline Tokyo CPI 1.9%, core-core (ex food and energy) 2.0% The BOJ raised its policy rate to 1.25% on 18 September in a 7-2 vote and signalled further hikes if its outlook holds (more here on this also) Japan's August unemployment rate is expected steady at 2.4%, with the jobs-to-applicants ratio at 1.18 September monetary base data follows at 2350 GMT, after a 15.7% annual contraction in August Core CPI for the Tokyo area, which excludes fresh food, is forecast to rise 2.4% from a year earlier, up from 1.8% in August. That would take the measure clearly above the central bank's 2% target. Headline Tokyo CPI rose 1.9% in August, while the core-core measure, which strips out both food and energy and is closely watched as a gauge of underlying inflation, was 2.0%. The figures are scheduled for release at 2330 GMT on Thursday, or 8.30 am Friday in Tokyo. Tokyo data is published about three weeks ahead of the nationwide figures and is treated as a lea