At its 29–30 October monetary policy meeting, the BOJ is expected to indicate in its outlook that underlying inflation is judged to have reached 2%. The policy rate, raised to 1.25% in September, is widely expected to remain unchanged at the October meeting, with a consecutive rate hike unlikely.
The BOJ is reportedly adjusting the wording of its outlook report ahead of the meeting to reflect its view that underlying inflation is “getting quite close” to 2%. Governor Kazuo Ueda said in remarks in Bangkok that it was “getting quite close to 2%,” adding that further increases could no longer be tolerated and that achieving a sustained level would be a major policy objective.
The BOJ also expressed the view that financial market conditions were accommodative and explained that it would adjust the degree of easing by raising the policy rate. How this view will be reflected in the wording at the October meeting is expected to be a key focus of discussion.
However, multiple reports agree that the BOJ is inclined to refrain from an additional rate hike in October. There is strong caution about raising rates again immediately after the September hike, leaving the possibility of the next hike from the December meeting onward.
Policy board member Junko Koeda said that decisions would be made at each meeting. The BOJ is expected to maintain its rate-hike course while assessing the data in October. The final decision will be confirmed by the outcome of the 29–30 meeting and the outlook report.