No interest rate hike next week? It is rumored that the Bank of Japan thinks it can wait a bit longer

According to informed sources, officials from the Bank of Japan believe that there is almost no cost to waiting before raising interest rates, while remaining open to a rate hike next week, depending on data and market developments. The sources said that even if the Bank of Japan decides to wait until January or longer to raise rates, the authorities do not see this as incurring significant costs, as there are signs that the risk of inflation overshooting is limited. Meanwhile, some officials reportedly do not oppose proposing a rate hike at this meeting. After the report was released, the yen weakened against the dollar after a tug-of-war. The dollar briefly reached 152.82 yen, up from around 151.60 in previous trading. As of the time of writing, the dollar-yen exchange rate is around 152.10. The market has been trying to figure out when the Bank of Japan will next raise interest rates, with December and January both appearing to be possibilities. Previously, Bank of Japan officials and media reports sent mixed signals, with Bank of Japan Governor Kazuo Ueda stating in an interview with Nikkei last month that a rate hike is "coming soon." A few days later, Japanese media reported concerns within the Bank of Japan about raising rates too early. Last week, dovish policy committee member Toyoaki Nakamura stated that he generally does not oppose a rate hike, but that data must be reviewed before making a decision this month. According to informed sources, officials believe that the next rate hike is just a matter of time, as the economy and inflation align with their forecasts. The sources said that officials will make a final decision only after carefully assessing data and financial markets before announcing the policy decision on December 19. Kazuo Ueda and his board will discuss next week whether there is a need to raise the benchmark interest rate from 0.25%. Unlike in July, the yen has not shown strong signs of weakening, leading the Bank of Japan to believe that the risk of the yen pushing up inflation has diminished. The data that Bank of Japan officials will carefully analyze includes the U.S. CPI data released on Wednesday, the quarterly Tankan business sentiment survey to be released on Friday, and the results of the Federal Reserve's meeting just hours before the Bank of Japan makes its policy decision. The U.S. inflation rate for November met expectations, reinforcing investors' views that the Federal Reserve may cut rates again next week