BOJ Expected to Stand Pat in October, Inflation Forecasts May Be Revised Slightly Higher
nashnova research
Four sources tell Reuters the Bank of Japan will keep rates at 1.25% when its Oct 30 meeting ends, but may edge up its FY2027 core-inflation forecast — standing pat now while keeping the door open for a possible December hike.
Why no hike in October?
The BOJ raised its benchmark rate to 1.25% last month — a 31-year high. This means → the urgency for another move so soon is low; the market needs time to digest.
Sources say clearly: unless the yen resumes a sharp slide, pushing up import costs and headline inflation, there will be no move this time.
In plain terms = if the yen isn't crashing, there's no rush to hit the brakes again.
How will the inflation forecast change?
In July the BOJ projected core CPI at 2.5% for FY2026 and 2.4% for FY2027, assuming fuel-cost pass-through fades in the second half of next year.
The new forecast may "slightly" raise the FY2027 core-inflation number, driven by oil prices climbing again recently.
But the revision will be modest — there is almost no sign that the energy shock is triggering a wage-price spiral (prices up → wages up → prices up again).
One source said: "Consumer-price gains may last longer than expected, but core inflation hasn't shifted materially."
Will the growth forecast move?
Largely unchanged: 0.6% for FY2026, 0.8% for FY2027.
Strong AI-related exports are offsetting weak consumer spending. This reflects an economy leaning on exports while domestic demand stays soft.
A food-consumption-tax cut is expected to start next April, but the legislation has not cleared parliament — the BOJ will not factor it into this round of projections.
Is the door still open for a December hike?
Governor Kazuo Ueda has already warned that Middle East tensions, a weak yen, and surging AI demand together create a risk of core inflation overshooting the 2% target.
The quarterly report will continue to flag upside inflation risks and maintain that "financial conditions remain accommodative." This means → the official language stays hawkish, preserving full policy room for further tightening.
In plain terms = no action in October, but no softening of tone — whether December brings a hike depends on the yen's path and whether inflation data keep beating expectations.
市场有风险，内容仅供研究参考，不构成投资建议。