Japan's December inflation unexpectedly cools down, but the central bank still pushes ahead with interest rate hikes—what does this mean for your asset allocation

【BlockBeats】Tokyo just released inflation data that once again presents a “black swan.” In December, the consumer price index excluding fresh food rose by 2.3% year-on-year, a significant slowdown from the previous 2.8%, and well below the economists’ forecast of 2.5%. This is the first such cooling since August, mainly because the upward pressure on food prices has finally eased, and energy costs have also come down.

The overall inflation rate dropped from 2.7% last year to 2.0%. Sounds good, but there’s a detail: core inflation excluding energy prices remains at 2.6%, indicating that price pressures haven’t fully dissipated.

The key point is that this Tokyo data is seen as a barometer for nationwide inflation. Although the slowdown exceeded expectations, guess what? The Bank of Japan has no intention of easing just because of this correction. Inflation is still above the central bank’s 2% target, so the path of continued rate hikes is already set. For crypto assets, this means the yen may continue to appreciate, and cross-border liquidity allocations need to be reconsidered.