Bank of Japan October meeting expected to bring a rate hold, CNBC survey finds

The Bank of Japan October meeting is expected to end with the policy rate unchanged at 1.25%, according to a CNBC survey of 16 economists and analysts. All respondents expected a pause at Friday’s conclusion, while also anticipating that the central bank would keep a further increase in view for December or January.

The expected hold would follow a rate increase the previous month that CNBC said took the policy rate to its highest level in 31 years. The survey was conducted from Oct. 14 to Oct. 26.

Why is the Bank of Japan expected to hold rates?

Respondents’ forecasts suggest they see a pause as compatible with further monetary tightening rather than as the end of the cycle. CNBC reported that every participant expected the Bank of Japan to signal the possibility of another rate increase in either December or January.

Inflation and wage figures cited by CNBC provide the backdrop to those expectations. Japan’s core consumer-price index, excluding fresh food, rose 2.1% in September from a year earlier. Inflation-adjusted wages increased 1.5% in August from a year earlier, their eighth successive monthly gain, CNBC reported.

Economists also identified reasons the policy board may not move again immediately. Homin Lee, senior macro strategist at Lombard Odier, said the domestic bond market’s fragility could limit consensus for successive increases, even though macroeconomic conditions supported further tightening. Sosuke Nakamura, an economist at Citi Research, said he did not see clear evidence of inflation accelerating enough to justify consecutive moves.

Ryutaro Kimura, senior fixed-income strategist at BNP Paribas Asset Management, said he was watching for a possible change in the Bank of Japan’s policy-statement language. He pointed to whether officials revise their assessment from underlying consumer-price inflation “approaching” 2% to having “reached” that level.

What did respondents forecast for the yen and Japanese government bonds?

Nine of the 16 respondents expected the yen to trade between ¥157 and ¥158 per dollar over the next month, CNBC reported. Their three-month estimates were less concentrated, ranging from ¥150 to ¥160 per dollar.

For government bonds, nine respondents projected the benchmark 10-year Japanese government bond yield at 3% to 3.1% by year-end, compared with 2.809% at the time cited by CNBC. Seven expected the 30-year yield to reach 4% to 4.1%, from 3.829% as of Tuesday.

Thirteen respondents placed the eventual policy-rate peak at 1.75% to 2% around mid-2027. Those are survey forecasts, rather than Bank of Japan guidance or a confirmed policy path.

This story draws on original reporting from CNBC.