Sources: BOJ may raise inflation forecast but keep rates unchanged

October 20 — The Bank of Japan may raise its inflation outlook for the next fiscal year in its forecast due this month, as rising oil prices are exerting more persistent price pressure on the economy than expected, according to four people familiar with the matter. Given that the BOJ just raised rates last month, the central bank is expected to keep rates unchanged at its two-day policy meeting ending October 30, unless the yen weakens sharply again, pushing up import costs and overall inflation, the sources said. However, the BOJ may continue to emphasize growing inflation risks in its quarterly report released after the meeting, leaving room for another rate hike as early as December, the sources added. One source noted: "Consumer price gains may persist longer than expected, even though underlying inflation has not changed significantly." Two other sources expressed similar views.