BOJ Deputy Governor Himino Signals December Rate Hike Possible as Inflation Nears 2% Target

Bank of Japan Deputy Governor Ryozo Himino said Wednesday that underlying inflation is "quite close" to the central bank's 2% target and financial conditions remain accommodative, reinforcing market expectations for a rate increase as soon as December. Speaking to parliament, he said inflation risks are high and delaying monetary tightening could hurt the economy long term. The BOJ raised its key rate to a 31-year high of 1.25% last month. Himino said real borrowing costs remain low and bank lending is growing strongly, showing past hikes have not yet tightened conditions. He cited rising fuel and raw material costs, robust global AI demand, Middle East tensions and a weak yen as upward price pressures. The BOJ is expected to hold rates at its two-day meeting ending October 30 but may raise its inflation outlook for the next fiscal year. Analysts warn Prime Minister Sanae Takaichi's tax cut and spending plans could boost demand and inflation. Finance Minister Satsuki Katayama said fiscal policy will aim to expand supply capacity without accelerating inflation.