Japan’s central bank, the Bank of Japan, is leaning toward leaving its policy rate unchanged at the meeting on October 30, following the hike to 1.25 percent in September. However, another hike could be on the table as early as December, Bloomberg News reports, citing sources.
According to the sources, the central bank sees no urgent need for further tightening as long as the risks of rising inflation do not increase sharply. Instead, the bank wants to assess the effects of previous hikes and await new economic data.
The market is currently pricing in a probability of around 10 percent of a hike in October, while the probability of a hike by December stands at 88 percent.
Governor Kazuo Ueda has meanwhile stressed the importance of inflation stabilizing around the 2 percent target. The bank is also expected to factor the effects of high oil prices and a possible temporary cut in food VAT into its upcoming forecasts.
