Japan: Core prices reach 2%, the target of its central bank

WHAT HAPPENED

Tokyo's core inflation rose from 1.8% to 2.0% in August, right at the Bank of Japan's target. Since Tokyo publishes its figures earlier, this data anticipates possible pressure to raise rates on September 17 and 18.

WHY IT MATTERS

Japan has had very low rates for years. If they rise, loans and mortgages become more expensive, but savings in yen earn more. The yen could strengthen: importing would be cheaper and selling Japanese products abroad, more difficult. Money could also flow out of markets like Mexico and Brazil.

AND FOR YOUR PORTFOLIO

For a long-term portfolio, Japan can move two pieces at once: the value of the yen and the money flowing into emerging markets. If borrowing in yen stops being cheap, some investors might withdraw funds from Mexico or Brazil, increasing volatility without necessarily changing the story of their companies.