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BoJ could signal underlying inflation near 2% target

A potential BoJ message later this month may reinforce expectations for a December interest rate increase, according to sources.

Reported · Written up by our desk · Central Banks

FXStreet reports that the Bank of Japan may indicate later this month that underlying inflation is approaching its 2% target, based on three sources familiar with the central bank’s thinking.

The outlet says such a signal would highlight the BoJ’s readiness to resume raising interest rates in coming months, even though the announcement could be largely symbolic.

FXStreet also notes that after increasing rates in September, some BoJ policymakers remain cautious about another hike this month and want to evaluate additional economic data and the impact of prior rate increases on domestic financial conditions before acting again.

The sources cited by FXStreet said the message could strengthen market expectations for a rate increase in December and show the BoJ is prepared to lift borrowing costs at relatively short intervals.

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