BOJ expected to lift rates to 1.50% in December, economist poll shows
The share of respondents expecting rates to reach 2.00% or more increased to 51%, compared with 40% in September.
Japan nearing wage-driven inflation, finance minister says
Satsuki Katayama said planned tax relief and payouts would cushion households, while analysts warned fiscal stimulus could complicate inflation control.
Japan is close to moving from inflation fueled by import costs to sustained price growth supported by higher wages, Finance Minister Satsuki Katayama told parliament on October 21. She said the government's planned consumption tax cut and payouts were intended to ease pressure on household living costs.
Responding to a question about whether tax relief could undermine the Bank of Japan's interest rate increases, Katayama said officials were exchanging views with the central bank on several fronts. She said their assessments did not differ.
The BOJ increased rates in September to 1.25%, a level not reached in 31 years. The energy shock stemming from the Iran war, robust global AI demand and a weak yen making imports more expensive have increased the risk of underlying inflation exceeding its 2% target.
Analysts have warned that Prime Minister Sanae Takaichi's planned food consumption tax cut and large spending plans could stimulate demand, countering the BOJ's inflation restraint efforts. Katayama acknowledged that tax cuts generally raise inflation by encouraging demand, but said fiscal policy would expand Japan's supply capacity without accelerating price increases.