BOJ Seen Shifting to More Aggressive Inflation Fighting Posture

Tsutomu Watanabe, a former Bank of Japan official known for his expertise on price trends, predicts that the central bank may shift its posture from tolerating inflation to actively fighting it as soon as December. This change would likely lead to an acceleration in interest rate hikes.

The third wave of inflation is attributed by Watanabe to the ongoing Middle East conflict. He notes that this wave will be more modest compared to the previous two, with consumer inflation excluding fresh food and fuel peaking near 3% around March next year.

Japan has experienced a series of inflation waves, starting with the Ukraine war, followed by domestic wage hikes and rising rice costs. Watanabe's prediction suggests that the BOJ may be preparing to take a more aggressive stance against inflation.