BOJ declares victory in hitting price target, signals near-term hikes
TLT•The Bank of Japan held its policy rate at 1.25% and said underlying inflation was roughly at its 2% target, signaling it could raise rates again as soon as December. It also plans to accelerate annual exchange-traded fund sales to 860 billion yen from 330 billion yen starting in January.
1. Inflation target reached
The Bank of Japan said underlying inflation was generally consistent with its 2% target and that it would focus on keeping inflation anchored around that level. The central bank held its policy rate at 1.25%, while board member Hajime Takata dissented and proposed raising it to 1.5%.
2. ETF sales to accelerate
Starting in January, the BOJ will increase annual sales of exchange-traded funds to 860 billion yen ($5.45 billion) from 330 billion yen. The move surprised market participants.
3. Forecasts revised higher
The BOJ raised its core inflation forecast for the fiscal year ending March 2028 to 2.6% from 2.4%. Most analysts polled by Reuters expect a rate increase to 1.5% in December, followed by further hikes next year.
