Tokyo Inflation Eases More Than Expected, BoJ Still Poised for Rate Hikes

• Tokyo's core inflation (excluding fresh food) eased to 2.3% in December, down from 2.8% in November, surpassing economist expectations of 2.5%.
• This marks the first deceleration since August, primarily due to softer food price gains and falling energy costs.
• Despite easing inflation, the Bank of Japan (BoJ) is expected to continue interest rate hikes, with Governor Kazuo Ueda hinting at further monetary tightening.
• The BoJ recently raised its policy rate to 0.75%, the highest level since 1995, as inflation remains above its 2% target.
• Japanese equity markets reacted positively, with the Nikkei 225 gaining nearly 1%.

Why It Matters: Tokyo inflation eased, but BoJ is set to continue rate hikes as CPI remains above target.