Mainichi Shimbun and Asahi Shimbun reported on October 25 that the Bank of Japan, the country's central bank, is highly likely to keep its benchmark interest rate unchanged at the upcoming monetary policy meeting next week.
Mainichi Shimbun stated that the Bank of Japan is expected to hold off on raising rates, as it believes more time is needed to communicate with the cabinet of Prime Minister Sanae Takaichi, who has advocated for "aggressive fiscal policy."
The Bank of Japan will hold its monetary policy meeting on October 29-30. The current interest rate is "around 0.5%," and it has been kept unchanged for five consecutive meetings since it was raised in January.
The Bank of Japan maintains its stance that it will raise rates in the future, citing the fact that inflation is above 2% and real interest rates remain extremely low.
At last month's meeting, 2 out of 9 board members proposed raising the rate to 0.75%.
At her inauguration press conference on October 21, Prime Minister Takaichi stated, "The government bears ultimate responsibility for economic policy," signaling the government's intention to play an active role in monetary policy.
Prime Minister Takaichi also made it clear during last year's ruling Liberal Democratic Party leadership election that she opposed raising interest rates.
Mainichi Shimbun pointed out that "the biggest challenge for the Takaichi administration is inflation countermeasures," and noted that if the benchmark interest rate is kept low, the yen's weakness could persist and import prices may rise.
Asahi Shimbun reported that the Bank of Japan is expected to hold off on a rate hike in order to further observe the impact of tariff policies under the Donald Trump administration in the United States.
Mainichi Shimbun also reported that in Japan's financial markets, the prevailing view is that the Bank of Japan will raise rates after December.
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