Japan's core CPI growth slowed significantly in August. The central bank is expected to keep interest rates unchanged on Friday.

With the support of government subsidies for public utilities, the core consumer price inflation in Japan has significantly slowed down, but it is still far above the central bank's target. The Bank of Japan is expected to announce its interest rate decision soon, and it is likely to stand pat. The Ministry of Internal Affairs and Communications in Japan announced on Friday that the CPI excluding fresh food rose by 2.7% year-on-year in August, a significant slowdown from July's 3.1% and the smallest increase since November last year, in line with economists' median estimates. Economists had previously anticipated that the subsidies for public utilities, which were reinstated to help households cope with record-high temperatures, would help alleviate inflation pressures. However, after further excluding energy, consumer prices rose by 3.3% year-on-year, only slightly lower than in July and in line with analysts' median forecasts. The latest CPI data is unlikely to change the Bank of Japan's policy decision on Friday, as observers widely expect policymakers to keep interest rates unchanged. Traders will closely watch Governor Haruhiko Kuroda's press conference to see if he signals a further rate hike later this year.