The Bank of Japan (BoJ) could indicate later this month that underlying inflation has reached nearly its 2% target, according to three sources familiar with the central bank’s thinking. Such a signal would underscore the BoJ’s willingness to resume raising interest rates in the coming months.

While the announcement would be largely symbolic, it could strengthen market expectations for a rate increase in December and demonstrate that the central bank remains prepared to lift borrowing costs at relatively short intervals.

The sources said after increasing rates in September, some BoJ policymakers remain cautious about another hike this month. They would prefer to assess more economic data and evaluate how previous rate increases have influenced domestic financial conditions before making another move.

Market reaction

As of writing, the USD/JPY pair is up 0.15% on the day at 158.15.