Bank of Japan officials now believe there is no need to raise interest rates this month, and the next rate hike could possibly be in ……

According to informed sources, Bank of Japan officials believe there is no need to rush to raise interest rates this month, but they still plan to raise rates at some point in the future as inflation is in line with expectations.

These informed sources said that officials believe there is little risk of prices significantly exceeding the Bank's quarterly forecast set in July, so there is no need to take swift action. They added that the Bank of Japan also needs to pay attention to the impact of the U.S. economy and the U.S. elections on the economy and markets before taking the next step, as this is another source of highly uncertain factors.

The Bank of Japan is expected to maintain its benchmark interest rate of 0.25% unchanged at the policy meeting ending on October 31. A point of focus is whether the bank may still consider a third rate hike in December this year. This could depend on the clarity of the global economy at that time.

These informed sources said that it is difficult to predict how quickly the uncertainties in the global financial markets and the U.S. economy will dissipate, so the bank needs to review these factors at each meeting.

Advertisement

According to these informed sources, at this month's policy meeting, officials may discuss whether they can modify the assessment made in July that the risks to prices are skewed to the upside for this fiscal year and the next fiscal year. They said that although the yen has depreciated against the dollar recently, its rise compared to three months ago has helped to mitigate the upward risk to inflation.

The informed sources also said that authorities do not believe there is any need for any significant adjustments to price forecasts, and they believe that the inflation trend is consistent with achieving the target in the second half of their three-year forecast period ending in March 2027.

These informed sources added that with less than two weeks to go before the next policy meeting, the Bank of Japan has not yet reached a final conclusion on the economic outlook report or monetary policy, and the bank will closely monitor financial markets and data until the last moment before making a decision. Data released on Friday showed that Japan's CPI rose 2.4% year-on-year in September, marking the 30th consecutive month that this indicator has met or exceeded the Bank of Japan's target.