Bank of Japan to hold rates, signal further hikes
TLT•The Bank of Japan is set to keep its policy rate at 1.25% and may signal that underlying inflation has roughly reached its 2% target, leaving scope for further hikes. Most analysts polled expect a rise to 1.5% in December.
1. Policy outlook
The Bank of Japan is set to keep its policy rate at 1.25% at its meeting ending Friday, while stressing its focus on preventing underlying inflation from overshooting its 2% target. People familiar with the matter said the bank is likely to slightly raise its next fiscal year's price forecast and signal that underlying inflation has roughly achieved its target.
2. Markets eye next moves
Markets will scrutinise Governor Kazuo Ueda's post-meeting comments for clues on the timing and pace of further hikes. Most analysts polled expect the BOJ to raise its rate to 1.5% in December, with further increases next year and a terminal rate projection centered around 1.75% to 2%. Core consumer inflation exceeded the BOJ's 2% target in September for the first time in nine months, as high fuel costs blunted the impact of government subsidies.
