Report: Bank of Japan officials stated that there is no rush to raise interest rates in October, and there is no need to adjust inflation expectations

Bank of Japan Officials Believe Consistent Inflation and Expectations, No Rush to Raise Rates in October

On Friday, according to sources cited by Bloomberg, Bank of Japan officials believe that the risk of prices significantly exceeding the Bank's quarterly forecast from July is low, therefore there is no need to take swift action. Data released on Friday showed a 2.5% increase in CPI in September, marking the 30th consecutive month that the indicator has met/exceeded the Bank of Japan's target.

Sources also added that the Bank of Japan believes it is necessary to monitor the U.S. economy and the potential impact of next month's U.S. elections on the economy and markets, as well as other highly uncertain factors before taking the next steps. It is difficult to predict how quickly the uncertainties in the global financial markets and the U.S. economy will dissipate, so the Bank of Japan needs to carefully study these factors at each meeting.

Sources stated that authorities also believe there is no need for significant adjustments to price forecasts, and that the inflation trend is consistent with reaching the target in the latter half of the three-year forecast period ending in March 2027.

It is widely expected that the Bank of Japan will maintain its benchmark interest rate at 0.25% at the policy meeting on October 31. The focus is on whether the Bank may still consider a third rate hike this year in December.

Furthermore, sources revealed that officials may discuss inflation forecasts at this month's policy meeting, with price risks showing an upward trend for this fiscal year and the next. They noted that while the recent depreciation of the yen against the U.S. dollar in the past few days, the appreciation three months ago has helped alleviate the upward risks of inflation