Sources: Bank of Japan May Raise Inflation Forecasts, But Will Maintain Interest Rates Unchanged

On October 20 that, according to four sources familiar with the matter, the Bank of Japan may raise its inflation outlook for the next fiscal year in forecasts released this month, as rising oil prices are exerting more persistent price pressures on the economy than anticipated. Sources said that given the central bank raised interest rates last month, it is expected to keep rates unchanged at its two-day policy meeting ending on October 30, unless the yen depreciates sharply again, driving up import costs and overall inflation.

However, sources indicated that the Bank of Japan may continue to emphasize growing inflation risks in its quarterly report published after the meeting, leaving room for another rate hike as early as December. One source stated, "Consumer price increases may persist longer than expected, although underlying inflation has not changed significantly." Two other sources echoed this view. (Jin10)