Japan: Inflation rose to 1.9% in July, close to raising rates

WHAT HAPPENED

Japan's inflation reached 1.9% annually in July, up from 1.6% in June. The figure excluding fresh food also rose to 1.8%. As it approaches the 2% target, the possibility of a rate hike in September increases.

WHY IT MATTERS

Japanese households are already paying more for groceries, electricity, and gas. If the interest rate rises, borrowing costs will also increase. Additionally, borrowing yen would no longer be as cheap, and some of that money could leave U.S. and emerging market stocks and bonds.

AND FOR YOUR PORTFOLIO

For a long-term portfolio, the change may mean more movements in stocks and bonds from different countries, although it does not solely determine the market's direction. In Japan, it also reduces households' purchasing power and may cool consumption.