Bank of Japan Meeting Underway, Rate Decision Due on Oct. 30
Key Facts
The Bank of Japan’s October meeting is still underway, and the bank had not announced its rate decision when the previous draft was prepared. The meeting runs on Oct. 29 and 30, 2026, with the bank’s official schedule setting Oct. 30 for its monetary policy statement. A hold therefore cannot be described as a decision the bank has made; Reuters reported before the meeting that expectations favored keeping the policy rate at 1.25% by a majority vote. Investors are awaiting the decision as Japanese inflation remains above the bank’s 2% target, with higher oil prices potentially affecting its price outlook. The statement and forthcoming outlook report are expected to provide the next signal on the monetary policy path.
Japan’s headline consumer price index rose 2.1% year over year in September, according to the Statistics Bureau of Japan. The index excluding fresh food also increased 2.1%, while the measure excluding fresh food and energy rose 2.4%. These readings put underlying price pressures in focus for policymakers. Reuters reported that the bank may indicate in its forecasts that underlying inflation has reached roughly its 2% target. At the same time, the agency reported that the bank may raise its inflation forecasts for the next fiscal year, as the impact of higher oil prices lasts longer than expected. The bank’s July outlook report indicated that inflation could clearly exceed 2% in the second half of fiscal 2026 before moving toward 2% through fiscal 2028 as the effect of higher oil prices fades.
Activity data present a mixed picture for the bank. The index remained in expansion territory, but its slowdown to a 7-month low points to some loss of momentum in the sector. S&P Global said significant supply-chain delays also added to manufacturers’ input-cost pressures in October, linking those delays mainly to the war in the Middle East. Among large companies, manufacturers’ sentiment rose to 24 from 22 in the quarterly Tankan survey released by the Bank of Japan on Oct. 1, according to the Associated Press.
The indicators follow the Bank of Japan’s September rate increase to 1.25%, its highest level in 31 years, according to a Reuters report based on a summary of the bank’s meeting. Reuters said the increase followed an earlier rise in June, at a faster pace than the roughly twice-yearly pace of increases during 2024 and 2025. After the increase, investors sold the yen as their expectations of another immediate hike receded, the same report said. Before the October meeting, Reuters reported that the bank may keep rates steady while leaving room for another increase in December. Bank board member Junko Koeda said in remarks reported by Reuters that “the Bank of Japan should not become overly cautious about raising interest rates, given the significant risks of higher inflation”; a stance that highlights the debate over the timing of the next move.
Attention will turn to the outlook report after the statement. The bank plans to publish its “Bank’s View” of the Outlook for Economic Activity and Prices on Oct. 30, followed by the full text on Nov. 2, according to its official schedule. A Reuters poll conducted from Oct. 13 to 19 found that 54 of 78 economists expected the interest rate to reach 1.50% in the fourth quarter. Among respondents who named a month for the next increase, about 80% chose December. But Reuters reported that policymakers are waiting for upcoming data and market moves before weighing a rate increase in December against delaying it until January 2027. The minutes of the October meeting are due on Dec. 23, while the minutes of the Sept. 17 and 18 meeting are scheduled for Nov. 5, according to the bank’s schedule.