Against the backdrop of the global inflation debate, markets are focused on the pace of the BOJ's rate hikes. AI demand and rising energy costs were discussed at the IMF meeting, offering indications of the outlook for the Bank of Japan's next move.
The IMF meeting was held in Bangkok, where inflation risks related to the war in Iran and AI-driven demand growth received considerable attention. BOJ Governor Ueda Kazuo (植田 和男) is expected to bring his discussions with fellow policymakers back to the policy debate, with indications that they may inform future adjustments.
Within the BOJ, the prevailing view is reportedly that interest rates should be left unchanged at the 29–30 October meeting to assess the impact of the September rate hike. Analysts, however, have presented a hawkish outlook that leaves room for a rate hike in December.
As the yen weakens, AI-related demand could further intensify inflationary pressures from higher energy costs and import prices, some observers have pointed out. The IMF assessed the global economy as resilient despite external shocks.
The BOJ raised rates in June and September, and the policy rate is at 1.25%. The BOJ's rate-hike pace and the factors informing its decisions may be reflected in upcoming quarterly outlooks, potentially providing clues to its future policy direction.