Capital Economics: Tokyo CPI will not prevent the Bank of Japan from resuming rate hikes in October

Capital Economics said in a report that Tokyo's weaker-than-expected CPI reading exaggerates the pace of slowing inflation across Japan. While the news reassured markets that an October rate hike was unlikely, Tokyo's softer September CPI was largely due to the city's introduction of free childcare. This was the latest in a series of measures taken in Tokyo and across Japan to ease price pressures. It is expected to reduce Japan's overall inflation rate by about 0.7 percentage points. National inflation, excluding fresh food and energy, is expected to fall to 3.1% from 3.3% this month. Capital Economics maintains its forecast that the Bank of Japan will resume tightening policy at its October meeting. (Jinshi)