BOJ may signal underlying inflation has hit 2% goal, sources say
TLT•The BOJ may say in its quarterly report due after its October 29-30 meeting that underlying inflation has roughly reached its 2% target, while many officials are cautious about another rate hike this month. The signal would be largely symbolic but could reinforce market expectations of a December hike.
1. Inflation near target
The Bank of Japan may signal this month that underlying inflation has roughly reached its 2% target, three sources familiar with its thinking said. Recent Tokyo consumer inflation and the BOJ’s quarterly tankan survey are likely strengthening that view, the sources said.
2. October hike uncertain
Many BOJ officials are cautious about raising rates again in October, after the central bank raised its key rate in September, and prefer to assess how earlier increases affected financial conditions. The tankan showed corporate inflation moving sideways, while inflation expectations remained elevated but were not flaring up, one source said.
3. Quarterly report due
The BOJ will likely point to continued rises in wholesale and consumer prices, steady wage gains and a renewed rise in crude oil prices in a quarterly report due after its October 29-30 policy meeting, the sources said. The report released in July projected underlying inflation would reach levels consistent with the 2% target sometime between October and March 2028.
