Four people familiar with the matter said the Bank of Japan may lift its inflation forecast for the next fiscal year in projections due this month, as higher oil prices are creating price pressure that is proving more persistent than previously expected. Even so, the central bank is expected to leave interest rates unchanged at its two-day policy meeting ending Oct. 30, according to the sources, largely because it raised rates only last month. They added that a fresh, sharp drop in the yen could alter that stance if it pushes up import costs and broader inflation. The sources also said the BOJ may continue to flag rising inflation risks in its quarterly report after the meeting, a signal that would leave room for another rate increase as early as December. One of the sources said consumer price gains could last longer than expected, even though underlying inflation has not changed significantly.
Four people familiar with the matter said on Oct. 20 that the Bank of Japan may raise its inflation outlook for the next fiscal year in projections due this month, as rising oil prices are putting more persistent price pressure on the economy than previously expected.
The sources said the BOJ is expected to keep interest rates unchanged at its two-day policy meeting ending Oct. 30, given that the central bank raised rates only last month. That view would change only if the yen were to fall sharply again and push up import costs and overall inflation.
The sources also said the BOJ may continue to stress growing inflation risks in the quarterly report released after the meeting. That would leave room for another rate increase as early as December.
One source said, 「Consumer price increases may last longer than expected, although underlying inflation has not changed significantly.」
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