Business · 2026-10-16 · Afternoon briefing

Bank of Japan signals rate hikes as inflation nears 2% ceiling

The governor of the Bank of Japan, Kazuo Ueda, has declared that underlying inflation is now close to the bank’s 2% target, stating on Friday "we cannot tolerate it rising any further." At a news conference following G20 and G7 meetings, Ueda said monetary policy has entered a new phase due to growing upside risks and that the bank will raise its policy rate as conditions warrant.

Despite the hawkish language, markets do not expect an immediate move. Data implies just a 5% probability of a rate hike at the BOJ's meeting on October 29-30th. Investors have instead priced in a more than 70% probability of an increase in December. Both the BOJ and the US Federal Reserve raised rates in September but are widely expected to hold them steady this month.

Ueda noted that the timing of future hikes will depend on developments in the Middle East, the AI sector, and currency markets. His comments came during a week of high-level economic talks where other leaders voiced caution. US Federal Reserve Chairman Kevin Warsh warned of "financial stability risks" from AI investment, while Japan's finance minister, Satsuki Katayama, noted G20 concerns over long-term interest rates.

Summary written by Cup of News with AI from the sources below. Check the originals for the full story.

Read the sources

• BOJ policymaker warns against being overly cautious on rate hikes
• Bank of Japan Raises Interest Rate to 1.25 Percent, Signals More Increases Ahead
• Bank of Japan Debated Need for Faster Rate Hikes, July Minutes Show
• USD/JPY Forecast: Hot US Inflation Tests Japan's Yen Defence
• RBI signals more rate hikes ahead: Could 7.25% yield level become a near-term market reference point?

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