Economists surveyed by CNBC expect the Bank of Japan to keep its benchmark at 1.25% this week, as recent inflation and wage data frame the decision.
All 16 economists and analysts surveyed from Oct. 14-26 forecast that the BOJ would hold rates at its Oct. 29-30 meeting. They also expected the bank to leave open the possibility of an increase in December or January, CNBC reported. The survey did not show how many respondents favored either month.
The current rate followed a Sept. 18 decision in which the BOJ voted 7-2 to set its uncollateralized overnight call rate at around 1.25%, effective Sept. 24. The BOJ said it would continue raising rates depending on developments in economic activity, prices and financial conditions. It said underlying inflation was approaching its 2% target and real interest rates remained low.
Japan's consumer price index excluding fresh food rose 2.1% from a year earlier in September, up from 1.7% in August, the Statistics Bureau said Oct. 23. The measure excluding both fresh food and energy increased 2.4% year over year.
Preliminary figures from the Ministry of Health, Labour and Welfare showed real total cash earnings rose 1.5% year over year in August using a price measure that excludes imputed rent. That measure increased for an eighth consecutive month. Using the all-items price index, real earnings rose 1.9%.
CNBC reported that yen weakness was adding to import costs and higher energy expenses were pressuring consumers, while government subsidies were cushioning some energy costs. In its September statement, the BOJ also cited yen depreciation, crude oil prices, AI-related demand and the pass-through of wage increases into prices as factors affecting inflation.
Reuters reported on Oct. 20, citing four people familiar with BOJ thinking, that the bank was expected to hold in October unless renewed yen weakness raised import costs and broader inflation. Reuters said a December increase remained possible.
The BOJ's schedule lists its policy meeting for Oct. 29-30, with the policy outlook report due Oct. 30.
