2025-12-26 03:21:59

Tokyo's latest inflation data has been released, and the market reaction has been quite intense. Core CPI has fallen to +2.3% month-on-month (previously +2.8%, market expectation +2.5%), while overall inflation indicators have declined to +2.0% (previously +2.7%), an unexpectedly sharp drop that caught many analysts off guard. Deep inflation data also continues to slow, reaching +2.6%.

At first glance, this is good news. Food and energy price pressures have clearly eased, but there is a key issue: core inflation still hovers above the 2% target, which is precisely where the Bank of Japan (BOJ) finds itself truly challenged. As a barometer of the national economy, the trend in Tokyo's data suggests that nationwide inflation may also gradually slow down.

Contradictorily, despite inflation cooling, the BOJ remains steadfast in its stance to continue raising interest rates, which seems illogical. But the central bank's considerations go far beyond short-term data fluctuations. What is their true intention?

The BOJ's core goal is not simply to make inflation data fall in the short term but to establish long-term market confidence in a 2% inflation expectation. This means ensuring that inflation expectations can be stabilized above 2%, rather than merely pursuing a numerical decline. The shadow of three decades of low inflation still looms over the Japanese economy, and the central bank fears losing all previous efforts. Through continuous signals of rate hikes, they aim to send a clear message to the market: the era of low inflation is gone.

For the crypto world, this means that the global liquidity environment still carries uncertainties. The BOJ's policy orientation will influence the yen exchange rate, which in turn affects cross-border capital flows and risk asset allocations. Close attention must be paid to the interaction between the central bank's policy pace and actual data moving forward.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

14 Likes

Reward
14
9
Repost
Share

Comment

0/400

TerraNeverForget

· 9h ago

The Bank of Japan's recent move is really quite extreme. Good data actually leads to interest rate hikes, fearing inflation expectations will falter again... The volatility of the yen in the crypto world is just annoying, with liquidity going through ups and downs.

View OriginalReply0

BearMarketNoodler

· 10h ago

The Bank of Japan's recent actions, to put it simply, are out of fear of history repeating itself. They prefer to raise interest rates to lock in inflation expectations. Smart people can see through this. The expectation of rate hikes hasn't fully materialized yet, but liquidity tightening has already begun, right? The crypto market should keep a close eye on the yen's movements. Core CPI is still hovering above 2%, and the central bank simply doesn't want to give the market any illusions of returning to low inflation. Japan's thirty-year low inflation trap has really scared them. Now, they'd rather kill than spare. Data exceeding expectations on the downside is actually a signal, indicating that the growth slowdown has become a fact. The rate hike cycle is losing momentum. This round of policies still support the yen, but in the short term, risk asset allocation will face new tests. The central bank's tough talk is one thing, but how the market actually moves is another. We need to wait for subsequent data to confirm. Liquidity is something that, no matter what the central bank says, is always better understood by how the data unfolds. Let's just wait and see the show.

View OriginalReply0

GrayscaleArbitrageur

· 22h ago

Wait, inflation has decreased but the central bank is raising interest rates? I can't quite wrap my head around this logic; it feels like psychological warfare. The yen might still be in for some turbulence; we need to keep an eye on how this affects capital flows. CPI is dropping so quickly, but core inflation is still sticking at 2%. The Bank of Japan is indeed a bit anxious. Thirty years of shadow, no wonder they are so cautious—afraid that inflation expectations will die again. This data still has an impact on the crypto world; liquidity is hard to predict.

View OriginalReply0

OptionWhisperer

· 12-26 03:50

The Bank of Japan is really playing a game of tug-of-war internally. Even with improving data, they still need to continue raising interest rates, which is adding to global liquidity. In our crypto circle, we need to be cautious of the yen, this double-edged sword.

View OriginalReply0

LiquidityWitch

· 12-26 03:49

The Bank of Japan's move is really a gamble on market sentiment. Data cools down, yet they still continue to raise interest rates. Isn't this just afraid of inflation expectations falling back again? Ultimately, they still lack confidence.

View OriginalReply0

CoconutWaterBoy

· 12-26 03:49

The Bank of Japan's recent move is really clever. Inflation has decreased, yet they continue to raise interest rates, which is part of a larger strategic plan. In the crypto world, we need to keep a close eye on the yen's movements; otherwise, we might get caught off guard. The central bank is just worried that inflation will return to a sluggish phase. Is the 30-year shadow so hard to dispel? Liquidity issues haven't been fully resolved yet, and there may still be variables ahead. A relief in inflation is a good thing, at least food and energy prices aren't as crazy anymore. Japan's move is quite aggressive—using interest rate hikes as a signal to stabilize expectations. The market has to believe it. Let's wait and see how the central bank plays its cards next; this rhythm is hard to grasp.

View OriginalReply0

PebbleHander

· 12-26 03:47

The Bank of Japan's recent move, to put it simply, is to prevent inflation expectations from reigniting. Rather than just cutting interest rates, it's more like betting on psychological expectations, right?

View OriginalReply0

rekt_but_resilient

· 12-26 03:47

The Bank of Japan's recent move is really incredible. The data improves, yet they still want to raise interest rates? That's hilarious. They're just afraid of inflation reigniting.

View OriginalReply0

ConsensusBot

· 12-26 03:27

The Bank of Japan's recent move is truly remarkable. The data has declined, yet they continue to raise interest rates, genuinely playing psychological warfare.

View OriginalReply0