Ex-BoJ policymaker Adachi says October hike can’t be ruled out

The Bank of Japan (BoJ) is likely to revise up its economic and inflation forecasts in its next quarterly review, which could pave the way for an interest rate hike in October, the central bank’s former board member Seiji Adachi told Reuters.

- 

Markets see a roughly 50% chance of a rate hike at the BoJ’s next policy meeting on Oct. 29-30, when the board will also release fresh quarterly growth and inflation forecasts.

BoJ Governor Kazuo Ueda has stressed the need to scrutinise the expected impact of US tariffs on Japan’s economy and wage outlook, in deciding how soon to resume rate hikes.

Based on the risk-focused approach, the central bank is likely to hold off raising rates until around March next year when there is more clarity on whether the hit from tariffs could affect next year’s wage talks, Mr. Adachi said on Wednesday.

But a rate hike at the BoJ’s next meeting in October cannot be ruled out, as stronger-than-expected economic growth in the second quarter will likely push up the board’s growth projection and keep inflation around its 2% target, he said.