Analyst: Japan's Core Inflation Higher Than Expected Triggers Rate Hike Discussion, May Impact Crypto Market

BlockBeats News, March 21st, CoinDesk analyst James Van Straten stated that just as the yen panic seemed to have eased, Japan's released core inflation data rose again. Data released Friday morning showed that Japan's core inflation in February rose by 3% year-on-year, lower than January's 3.2% but higher than the market's general expectation of 2.9%. At the same time, the overall Consumer Price Index (CPI) dropped from 4% to 3.7%.

Overall, these two indicators still remain well above the Bank of Japan's 2% inflation target, confirming Governor Haruhiko Kuroda's assessment that Japan is finally breaking free from decades of deflation. It is worth noting that since November last year, Japan's overall inflation rate has been higher than that of the United States, currently exceeding by nearly 100 basis points (bps).

The sustained high inflation, coupled with wage increases, has further fueled market calls for a Bank of Japan interest rate hike. In other words, the risk of a yen rebound that could trigger volatility in risk assets (including cryptocurrencies) has once again emerged.