TOKYO: Core inflation in Japan's capital slowed much more than expected in April and fell below the central bank's 2% target, data showed on Friday, complicating its decision on how soon to raise interest rates.

The reading comes just hours ahead of the conclusion of the Bank of Japan's two-day policy meeting, where the board is set to keep interest rates steady and produce fresh quarterly inflation projections through early 2027.

The core consumer price index (CPI) in Tokyo, a leading indicator of nationwide figures, increased 1.6% in April from a year earlier, slowing from a 2.4% gain in March. It was much lower than a median market forecast for a 2.2% rise.