ING: Japan's inflation data strengthens, providing support for the Bank of Japan to raise interest rates in May.

On March 28, ING said that Tokyo's inflation data was stronger than expected, strengthening the case for the Bank of Japan to raise interest rates as early as May. There are signs that price pressures are widening in both goods and services. Japan's Tokyo CPI came in at 2.9% y/y in March, up from a revised 2.8% in February and above market expectations of 2.7%. Core inflation also rose to 2.4%, beating consensus expectations of 2.2%. ING analysts noted that despite a slight decline in fresh food and utility prices during the month, broader inflationary pressures remained. "This trend reinforces our long-held view that the BoJ will raise interest rates in May," ING said in a note following the release of the data.
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