Tokyo core inflation slows to 2.6%, still above BOJ target
The October reading matched the market forecast ahead of the Bank of Japan's October 30 policy announcement.
Bank of Japan expected to hold rate at 1.25% as inflation stays in focus
The central bank's quarterly projections and Governor Kazuo Ueda's comments could provide clues to the timing of another rate increase.
The Bank of Japan is expected to leave its policy rate unchanged at 1.25% when its two-day meeting concludes on October 30, pausing after September's increase to assess how earlier tightening has affected lending conditions.
The central bank is also expected to emphasize preventing underlying inflation from exceeding its 2% goal. Analysts said that approach would reinforce its message that policy has shifted toward potentially more frequent rate increases.
According to a media report citing people familiar with the matter, the BOJ will likely raise its inflation forecast for the next fiscal year slightly in its quarterly projections. It is also expected to indicate that underlying inflation has broadly met its target.
September's rate increase followed a June hike, shortening the gap between moves compared with the roughly twice-yearly pace in 2024 and 2025. High energy costs and a weak yen's effect on import prices have added to inflation pressures.
Core consumer inflation moved above 2% in September after nine months without exceeding that level. Fuel costs linked to the prolonged Middle East conflict have weakened the effect of government fuel subsidies. Investors will look to Governor Kazuo Ueda's comments after the meeting for guidance on further tightening.