Bank of Japan may raise inflation outlook for next fiscal year, expected to keep interest rates unchanged in October

(1) According to four informed sources, the Bank of Japan may raise its inflation outlook for the next fiscal year in this month's forecast, as rising oil prices are bringing more persistent price pressures to the economy than previously expected.
(2) The sources said that since the Bank of Japan just raised interest rates last month, it is expected to keep rates unchanged at the two-day policy meeting ending on October 30.
(3) Unless the yen exchange rate falls sharply again, thereby driving up import costs and overall inflation, the central bank tends to remain on hold.
(4) However, the sources indicated that the Bank of Japan may continue to emphasize the increasing inflation risks in its quarterly report released after the meeting.
(5) This also leaves room for another rate hike as early as December.
(6) One of the sources pointed out that consumer price increases may persist longer than expected, although underlying inflation has not changed significantly; two other sources expressed the same view.