The market broadly expects the Bank of Japan to leave its policy rate unchanged at its October meeting. Meanwhile, inflation remains persistently high, and the Bank is expected to maintain its tightening stance.
Investing.com reports that the market expects the Bank of Japan to conclude its two-day Monetary Policy Meeting, beginning on 30 October, with the policy rate unchanged at its current level. The Bank of Japan has raised rates by a total of 50 basis points so far this year, and the current policy rate is expected to remain at 1.25%.
The article highlights that inflation in Japan remains persistently high, explaining that core CPI rose 2.1% year on year in September and that underlying inflation reached 2.4%. Against this backdrop, market expectations are growing that the Bank of Japan will maintain a stance oriented toward further tightening.
ANZ analysts said in a report that they expect the Bank of Japan to raise rates by 25bp in December and implement an additional hike in March next year. They also pointed out that the pace of rate hikes could slow because of uncertainty surrounding the end of government fuel subsidies and the impact of developments in the Middle East.
Tokyo-area CPI is scheduled for release in October ahead of the Bank of Japan's decision, and it is expected that the data could affect future interest-rate decisions. The article also presents the view that the Bank of Japan's policy direction could affect the yen exchange rate, the performance of exporters, and the outlook for the banking and domestic-demand sectors.