Japanese inflation rose slightly in August, with prices up 2.8 percent year-on-year, official data showed Friday, hours before the Bank of Japan was widely expected to leave interest rates unchanged.

Traders betting on further recovery in Japanese equities are looking to any steer from the Bank of Japan that may cap the yen’s gains and support exporters.

BoJ Governor Kazuo Ueda is seen sticking to the recent hawkish narrative. The Bank of Japan (BoJ) is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review.

Japan's core consumer inflation accelerated for the fourth straight month in August and tracked comfortably above the central bank's 2% target, data showed on Friday, keeping alive expectations for further interest rate hikes.

Japan’s key inflation gauge accelerated in August for a fourth consecutive month, hours before the Bank of Japan is scheduled to wrap up its latest policy decision meeting.