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Japan's core inflation close to two-year low adds pressure to BOJ

FILE PHOTO: Buyer discusses items at a supermarket in Tokyo 26 February 2015 REUTERS / Yuya Shino

Japan's base inflation slowed down to its weakest position in about two years in June, according to data on Friday, adding pressure on the Japanese Central Bank to provide more incentives to meet its 2% target.

The main consumer price index, which includes petroleum products but excluding fresh food prices, rose 0.6% in June from the previous year, com- pared with the economists' average estimate.

Reading in June was the weakest since July 2017, when the index rose by 0.5% and compared with 0.8% in May.

The so-called Nuclear Consumer Price Index, which removes the effects of variable food and energy costs and is closely monitored by the BOJ to assess the extent to which the strength of the economy has led to price increases, rose 0.5% in June from the previous year . ,

The data show that the central bank is still far from achieving its 2% elusive inflation, as the trade dispute between the US and China and the slowdown in global demand put pressure on the export-dependent economy.

Officials in Bosnia and Herzegovina said they were willing to expand the incentives if the economy worsened by joining the US Federal Reserve to signal that perhaps there would soon be relief.

But Bosnia and Herzegovina's Governor Haruyko Kuroda on Wednesday preserved his optimistic view of the economy, suggesting he does not see an urgent need to increase relief measures.

Expectations are rising sharply that the next move of the central bank will be even lighter, with some economists predicting it could happen this month.

Fed politicians who are moving toward their first interest rate cuts a decade later this month have outlined the question of whether interest rates should be cut by a quarter or a half percent.

Report by Kaori Kaneco; Editing by Shri Navaratnam

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