By Leika Kihara
TOKYO (Reuters) – Core consumer prices in Japan’s capital rose 2.2% in July from a year earlier, data showed on Friday, accelerating for the third straight month and keeping alive market expectations of a near- term interest rate hike.
The data comes ahead of the Bank of Japan’s two-day policy meeting that ends on Wednesday, when its board will debate whether to raise interest rates and lay out details on how it plans to taper its huge bond purchases.
The increase in the core consumer price index (CPI), which excludes volatile fresh food costs, matched a median market forecast and followed a 2.1% gain in June.
A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, rose 1.5% in July from a year earlier after a 1.8% rise in June.
The Tokyo inflation figures are considered a leading indicator of nationwide trends.
The BOJ ended eight years of negative interest rates and other remnants of its radical monetary stimulus in March as it judged that sustained achievement of its 2% inflation target has come into sight.
BOJ Governor Kazuo Ueda has said the central bank will raise interest rates from current near-zero levels if underlying inflation, which takes into account CPI and broader price gauges, accelerates toward 2% as it currently projects.
The central bank expects rising wages to push up service prices and keep inflation durably around 2%, a condition it set as a prerequisite to further phase out monetary stimulus.
(Reporting by Leika Kihara; Editing by Sam Holmes)
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