(Oct 18): Bank of Japan (BOJ) officials see little need to rush into raising interest rates this month while they remain on track to hike at a later stage with inflation staying in line with forecasts, according to people familiar with the matter.

Officials see only a small risk of prices significantly outpacing the central bank’s quarterly projections set out in July, reducing the need to act quickly, the people said. The BOJ also sees a need to monitor the US economy and the potential economic and market impact of the US election next month, among other sources of high uncertainty, before its next move, the people added.

The BOJ is widely expected to leave its 0.25% benchmark rate untouched at its policy meeting ending Oct 31. A focal point is whether it is still possible for the bank to consider a third rate hike this year in December. That will likely depend on the level of uncertainty at the time. 

It’s hard to predict how quickly uncertainties surrounding the global financial market and the US economy will dissipate, so the bank will need to examine those factors meeting by meeting, the people said.

At this month’s policy meeting, the officials will probably discuss whether they can revise their July assessment that risks for prices are on the upside for this fiscal year and the next, according to the people. While the yen has lost ground to the dollar in recent days, its appreciation from three months ago has helped ease upside risks to inflation, they said.     

The authorities also see little need for any major change in their price projections, and hold the view that the inflation trend is consistent with reaching their target in the latter half of a three-year projection period through March 2027, according to the people. 

With the next policy meeting still almost two weeks away, the BOJ has come to no final conclusion on its economic outlook report or monetary policy, and will monitor financial market and data up to the last moment, the people added. 

Data on Friday showed that consumer prices rose 2.4% in September, marking the 30th straight month in which the gauge was at or above the BOJ’s target.

Uploaded by Tham Yek Lee