BOJ sees little cost to waiting for next rate hike

BANK of Japan officials see little cost to waiting before raising interest rates while still being open to a hike next week depending on data and market developments, according to people familiar with the matter.

Even if the BOJ decides to wait until January or a little longer, authorities see it as not entailing a huge cost because signs point to little risk that inflation might overshoot, the people said. At the same time, some officials are not against a rate hike at this meeting if it is proposed, according to the people.

Officials view the next rate hike as a matter of time, with the economy and inflation in line with their projections, according to the people. The officials will make a final decision only after carefully assessing data and financial markets before delivering the policy decision on Dec 19, the people said. 

Governor Kazuo Ueda and his board are set to discuss whether they need to raise the benchmark rate from 0.25 per cent next week. With the yen not showing a strong momentum toward weakness unlike the situation in July, the officials judge that the risk of the currency pushing up inflation has softened. 

Among the data points BOJ officials will be carefully parsing is US CPI data later on Wednesday, the quarterly Tankan business sentiment survey on Friday and the result of the Federal Reserve meeting just several hours before the BOJ’s policy decision, according to the people.  BLOOMBERG