BOJ Policy Board Meeting: Market Consensus Tilts Toward No Rate Hike This Week

Analysts and investors are largely betting that the Bank of Japan (BOJ) will keep its policy rate unchanged at the two-day policy board meeting that concludes on Friday. The last rate increase occurred in September, and market participants see no immediate trigger for a consecutive or large hike. A Bloomberg-conducted poll found that none of the respondents expect a rate rise at this meeting, while about 83 % anticipate a hike in the December session.

Japan Times

Since the September adjustment, the BOJ has maintained a cautious stance amid mixed inflation signals. The central bank’s earlier moves were aimed at anchoring price expectations, but recent data have not shown the “underlying inflation overshooting” or “sharp upside risk” that would justify a rapid succession of hikes.

Japan Times

The prevailing view among market watchers is that the October decision will be a pause, allowing the BOJ to assess the impact of the September change. The Bloomberg poll’s 0 % expectation for an immediate increase contrasts sharply with the strong December-hike forecast, reflecting a belief that inflation pressures may intensify later in the year.

Japan Times

• “A consecutive or large rate hike is an option when underlying inflation is overshooting or a sharp upside risk is growing. The current economic situation does not reflect these conditions,” — Tsuyoshi Ueno, executive research fellow at NLI Research Institute

Japan Times

With the October meeting expected to end without a change, attention shifts to the December policy board session. The majority of market forecasts suggest that the BOJ may raise rates then, contingent on inflation data and economic trends observed in the intervening months. Investors will monitor upcoming economic releases for signs that could prompt the central bank to act before the year-end meeting.

Japan Times