Key facts
- BOJ likely to signal potential December rate hike.
- Policy rate expected to remain at 1.25% at Friday's meeting.
- Underlying inflation seen as having roughly achieved the 2% target.
- Wage gains becoming embedded and inflation expectations hovering around 2%.
The Bank of Japan is poised to declare victory in its long-standing effort to achieve its 2% inflation target at its policy meeting on Friday. Officials are likely to highlight risks of inflation overshooting, signaling a potential interest rate hike as early as December. This hawkish stance may bolster expectations that major central banks, including the US Federal Reserve and the European Central Bank, will raise rates by year-end due to persistent global inflationary pressures.