Japan's core inflation reached 2.1% in September, exceeding the Bank of Japan's 2% target for the first time in nine months. Core CPI excluding fuel rose to 2.4%, while services inflation increased to 1.5%. The Bank of Japan is scheduled to update its policy forecasts during a meeting concluding on October 30.
In September, the Bank of Japan raised its policy rate to 1.25%, marking a 31-year high. Analysts surveyed by Reuters anticipate a potential rate increase to 1.50% in December, with a projected peak between 1.75% and 2%. Meanwhile, CME FedWatch data indicates an 80.5% probability of a Federal Reserve rate hike by December 9.
The potential unwinding of the yen carry trade as Japanese rates rise could impact crypto markets. Bitcoin, which previously dropped from approximately $70,000 to $49,000 following a rate hike in July 2024, is currently facing downward pressure. At the time of reporting, Bitcoin was trading at $81,293, reflecting a 3.16% decline over 24 hours.
Bitcoin has recorded a 5.6% loss over the past month. After reaching a peak above $86,000 in early October, recent recovery attempts have stalled below the $84,000 level. Market participants are now monitoring the upcoming policy guidance from the Bank of Japan for further signals regarding interest rate trajectories.
