Japan's key inflation gauges accelerated for a second month, boosting
expectations the Bank of Japan may tighten policy soon. July core CPI rose 1.8%
YoY, up from 1.6% in June and in line with economists' median. The BOJ's
preferred core-core measure (ex fresh food and energy) rose 1.9% YoY; headline
CPI also climbed 1.9%. Energy prices contributed to the pickup, with July energy
up 0.6% YoY after a small decline in June. Governor UEDA has signaled
policymakers could speed up normalization; with yen weakness adding upside
inflation risk, markets have increased bets on BOJ action as soon as September
despite a rare US-Japan coordinated FX intervention at end-July.
