The Zhitong Finance App learned that the Bank of Japan's index for measuring potential inflation has risen to the highest level in three years, far exceeding the bank's 2% target, providing a basis for the authorities to continue to raise interest rates. According to a report released by the Bank of Japan on Tuesday, consumer prices excluding fresh food and special factors rose 3.2% year on year in September, up from 2.6% last month.
This result is likely to reinforce market speculation about recent interest rate hikes. Previously, the Bank of Japan raised borrowing costs to 1.25% in September, the fastest pace of austerity since 1990. Markets generally expect the Bank of Japan to keep its policy unchanged this Friday, although many predict that it may announce that potential inflation has finally reached the 2% target — more than 13 years since the target was set.
According to the survey, more than 80% of economists expect the Bank of Japan to raise interest rates at the December meeting. None of the economists interviewed expected action this Friday.
Special factors affecting the data include the Japanese government's subsidies for gasoline and utilities. These measures aimed at mitigating the cost of living crisis have slowed the rise in consumer prices. According to data released by the Japanese government last week, consumer prices excluding fresh food rose 2.1% year on year in September.
Recent data supports the Bank of Japan's strategy of continuing to raise the benchmark interest rate. Data released earlier on Tuesday showed that Japan's service producer price index rose due to the Middle East conflict.
Bank of Japan Governor Kazuo Ueda said this month that he can no longer tolerate a potential rise in inflation because it is already very close to 2%, which shows his intention to continue raising interest rates.