Summary

• Japanese inflation intensified in March despite the government's efforts to tame consumer prices.
• Even after policy effects, price pressures are strengthening and broadening.
• We still see an April hike possible if the BoJ gives priority to preventing inflation expectations from accelerating.

Inflation stronger than expected despite government subsidies

Japan’s headline CPI inflation rose 1.5% year-on-year in March (vs. 1.3% in February, 1.4% market consensus), and core inflation excluding fresh food accelerated for the first time in five months to a 1.8% rate (vs. 1.6% in February, 1.5% market

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