The Bank of Japan is widely expected to indicate at its 29–30 October Monetary Policy Meeting whether the underlying inflation rate has reached 2%. Even if it indicates that the target has been reached, an immediate policy shift is expected to be limited, and the next rate hike is anticipated from December onward.
The Bank of Japan is widely expected to indicate at its 29–30 October Monetary Policy Meeting whether the underlying inflation rate has reached 2%. Based on reports to date, even if it indicates that the target has been reached, it is not expected to make major immediate changes to monetary policy.
With the achievement of the price stability target as a precondition, the BOJ is expected to seek a policy interest rate above the neutral level, and reports suggest that it could strengthen its monetary tightening stance depending on the outcome. At the same time, uncertainty remains over whether it will proceed to full-scale tightening, given factors such as surging crude oil prices.
The next rate hike is widely expected at the 17–18 December Monetary Policy Meeting this year. Many observers believe that even an indication that the inflation target has been reached would not necessarily lead immediately to applying a neutral policy rate or to a substantial rate increase.