Tokyo core inflation steady at 2.8% — boosts BOJ rate-hike bets
Tokyo’s core consumer prices rose 2.8% year-on-year in November, unchanged from October and above economists’ 2.7% forecast, reinforcing market expectations that the Bank of Japan will tighten policy. Energy and processed-food prices were key drivers; services prices rose 1.5%. Industrial production increased 1.4%, unemployment held at 2.6% and the jobs-to-applicants ratio was 1.18, signalling labour-market resilience and potential wage pressure. The government has announced a ¥17.7 trillion (≈$113bn) package to cushion households, which analysts say could shave roughly 0.38 percentage points off core CPI next year but may not offset falling real wages. Traders increasingly price a BOJ rate move in December or early 2026 as persistent inflation, broadening price gains, and solid activity reduce the central bank’s tolerance for prolonged ultra-loose policy.
Bearish
Rising core inflation above target and stable economic indicators (industrial output, low unemployment, tight jobs market) increase the likelihood of BOJ rate hikes. Higher interest rates tend to strengthen the yen and put downward pressure on risk assets, including cryptocurrencies, as higher real yields make speculative assets less attractive and increase funding costs for leveraged positions. The announced fiscal package may provide temporary household relief, but analysts expect only a modest reduction in headline pressure. Historically, when major central banks signal or enact rate tightening (e.g., U.S. Fed hikes in 2022), crypto markets have seen short-term sell-offs and higher volatility as capital shifts away from risk-on trades. Short term: likely increased volatility and downward pressure on crypto prices amid risk-off flows and stronger yen. Long term: if rate hikes successfully tamp inflation without tipping the economy into deep recession, risk appetite can recover; however, higher structural rates may cap crypto valuations compared with a low-rate environment.