Bank of Japan Minutes Highlight Inflation Risks, Bolstering Year-End Rate-Hike Expectations

According to Jin10, minutes from the Bank of Japan’s September meeting showed policymakers’ concerns about inflation risks deepening, potentially reinforcing market expectations for another rate hike before year-end. Several policy board members said the likelihood of consumer inflation accelerating had increased since early autumn. They noted that cost pressures were gradually passing through to consumer goods and that more food and beverage products were scheduled for price increases this year than in previous years. The Bank of Japan raised its policy rate to 1.25% at the meeting. Overnight index swaps currently price in a nearly 80% probability of a rate hike in December.