Sources: Bank of Japan May Raise Inflation Forecast but Keep Interest Rates Unchanged

According to four people familiar with the matter, the Bank of Japan is likely to revise upward its inflation outlook for the next fiscal year in its forecasts released this month, as rising oil prices are exerting more persistent price pressure on the economy than previously expected. The sources noted that given the Bank of Japan just raised interest rates last month, it is expected to keep interest rates unchanged at the two-day policy meeting concluding on October 30, unless the Japanese yen depreciates sharply again, which would push up import costs and overall inflation. However, the sources stated that the Bank of Japan may continue to emphasize growing inflation risks in its quarterly report released after the meeting, leaving room for another interest rate hike as early as December. One of the sources pointed out, "The rise in consumer prices may last longer than expected, even though there has been no significant change in underlying inflation." Two other sources expressed the same view.

Source: PANewsRead original