BOJ may signal underlying inflation has reached about 2%
Sources say the central bank could update its assessment in an October report, though many officials favor waiting before raising rates again.
The Bank of Japan may indicate in October that its underlying inflation measure is roughly at the 2% goal, three people familiar with the bank's thinking said. They expect the assessment to appear in a quarterly report following the October 29-30 policy meeting.
After September's interest rate increase, many at the BOJ are reluctant to tighten policy again in October, the sources said. They would prefer more evidence on the effects of earlier increases on Japan's financial conditions.
Recent Tokyo consumer price figures and the BOJ's quarterly tankan business survey are likely strengthening officials' confidence that the underlying price trend has reached the goal, the sources said. But the survey also showed corporate inflation holding steady rather than accelerating enough to demand an immediate response.
The September increase brought the bank's key rate to its highest level in 31 years and followed a June hike. Governor Kazuo Ueda indicated that policy was entering a phase aimed at keeping underlying inflation from exceeding the target. He described that measure, which excludes one-off influences and reflects broad demand-driven price trends, as quite close to 2%.
The sources said sustained wage increases, rising wholesale and consumer prices, and a renewed increase in crude oil prices had strengthened the prospect of underlying inflation settling around the target. They spoke anonymously because they lacked authorization to comment publicly.