{"id":43826,"date":"2026-03-31T08:43:27","date_gmt":"2026-03-31T08:43:27","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/43826\/"},"modified":"2026-03-31T08:43:27","modified_gmt":"2026-03-31T08:43:27","slug":"danske-bank-expects-japanese-inflation-to-rise-boosting-prospects-of-a-boj-rate-hike-in-april","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/live-updates\/43826\/","title":{"rendered":"Danske Bank expects Japanese inflation to rise, boosting prospects of a BoJ rate hike in April"},"content":{"rendered":"Tokyo\u2019s March core CPI rose 1.7% year on year, below forecasts, as fuel subsidies reduced the impact of higher costs. An index excluding fresh food and fuel rose 2.3% after a 2.5% increase in February.\n\nHigher oil prices and a weaker yen are expected to push inflation up. Markets are pricing a 70% chance of a Bank of Japan rate rise in April, with Governor Kazuo Ueda indicating that action is possible.\n\n

Growth Data And Near Term Context<\/h3>\nFebruary figures showed a 2.1% month-on-month fall in factory output and a 0.2% year-on-year drop in retail sales. These data are described as less relevant to current conditions.\n\nThe Q1 Tankan business survey is due next and is expected to inform the Bank of Japan ahead of its policy meeting. Rising energy costs and yen weakness may reduce household purchasing power and weigh on the recovery.\n\nWe see the market pricing a high probability of a Bank of Japan rate hike in April, driven by rising oil prices and a persistently weak yen. With USD\/JPY having recently tested the 152 level, similar to the situation back in 2024, the pressure on the central bank to act is immense. Traders should consider buying puts on USD\/JPY or establishing call spreads on the JPY to position for a potential strengthening of the currency.\n\nThe anticipation of this policy shift has pushed up implied volatility on yen currency pairs, making options more expensive. As of this morning, three-month implied volatility on USD\/JPY is sitting near 9.5%, a significant jump from the lows we saw at the end of 2025. This suggests that while a hike is expected, the magnitude of the market’s reaction remains a key uncertainty.\n\n

Rates Positioning And Risk Assets<\/h3>\nIn the rates market, we are positioning for a steeper yield curve by selling short-term Japanese Government Bond (JGB) futures. This is a direct play on the Bank of Japan lifting its policy rate, a move that would echo the historic decision in March 2024 to end negative interest rates. Any hawkish surprise in the upcoming Tankan survey will only accelerate this repricing.\n\nFor equities, a rate hike could create headwinds for the Nikkei 225, which has been hovering near all-time highs above 40,000 points. We are hedging long equity portfolios by purchasing out-of-the-money puts on Nikkei futures. Looking back at the market’s initial wobble after the 2024 hike, we see a precedent for short-term weakness even if the long-term trend remains positive.\n\nThese pressures are not happening in a vacuum, as WTI crude oil is now firmly above $85 per barrel, directly feeding into inflation and squeezing consumer spending. The drop in February retail sales, although dated, highlights the fragility of the consumer. This combination of external cost pressures and a weak currency gives the Bank of Japan very little room to remain accommodative.\n\nCreate your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b>\n

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Start trading now – Click here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n","protected":false},"excerpt":{"rendered":"

Tokyo\u2019s March core CPI slowed to 1.7%, as fuel subsidies offset costs; BOJ hike odds rise.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-43826","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/43826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=43826"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/43826\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=43826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=43826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=43826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}