BOJ Keeps Fast Rate-Hike Pace, December Move in Focus

The Bank of Japan may sustain its accelerated pace of rate increases, with December seen as the next potential move, according to people familiar with the matter. Officials view the economic impact of hikes so far as limited and see underlying inflation as broadly consistent with the 2% target. The BOJ raised its benchmark rate in September for the second time in three months — its fastest tightening pace since 1990 — and officials see scope to roughly maintain quarterly increases while the policy rate remains distant from neutral. The bank is widely expected to hold at its October 30 meeting, when it issues a new quarterly outlook with only minor revisions. Core CPI excluding fresh food rose 2.1% in September, the first reading above target this year. Officials may signal next week that underlying inflation has reached 2% for the first time since the goal was set in 2013. The people stressed no path is predetermined, with decisions tied to the outlook, risks and cumulative tightening effects.