BOJ reportedly erring towards keeping interest rates unchanged next week

This is from Reuters, citing five sources familiar with the Japanese central bank’s thinking. The sources said that there is no clear consensus yet on the decision for December. That considering some policymakers feel that the conditions are right to continue with another rate hike. But at the balance, many policymakers are thinking that they should not be rushing into a decision with there being little risk of inflation overshooting in Japan.

Policymakers are said to be wanting to avoid putting out the idea that the BOJ is rushing to raise rates towards the neutral zone. But they do believe that there is a growing conviction that conditions are falling into place for another rate hike.

They might however feel more compelled to act if the Fed meeting next week does trigger a renewed plunge in the Japanese yen currency. However, the odds of that being a key foundation for the BOJ to hike are rather slim.

One of the sources say that unless the Fed pauses, which will trigger a dollar surge, then that could pressure the BOJ into acting to slow down any major rout in the yen.

This article was written by Justin Low at www.forexlive.com.