BoJ hints at inflation near 2% target ahead of potential rate hike
The Bank of Japan (BoJ) may soon signal that underlying inflation has nearly reached its 2% target, according to sources familiar with the central bank's plans. This potential announcement, expected later this month, could strengthen expectations for another interest rate hike in December, demonstrating the BoJ's readiness to continue tightening monetary policy at shorter intervals.
While the move would be largely symbolic, it reflects the BoJ's willingness to phase out its ultra-loose monetary policy. Some policymakers, however, remain cautious about raising rates again this month, preferring to assess more economic data and evaluate the impact of previous rate increases on domestic financial conditions.
The BoJ's shift away from its long-standing stimulative measures has already influenced the Japanese yen, which had weakened significantly due to the policy divergence with other central banks. The prospect of rising salaries in Japan, a key driver of inflation, has also played a role in the central bank's decision-making process.
As of the latest market data, the USD/JPY pair is up 0.15% on the day, trading at 158.15.