Bank of Japan may signal core inflation has hit the 2% target, boosting expectations of a December interest rate hike.

According to foreign media reports, the Bank of Japan (BOJ) is likely to release a key policy signal this month: Japan’s core inflation has roughly hit the 2% price stability target. If this assessment is formally included in the latest economic and price outlook, it will mark a further shift in the BOJ’s evaluation of inflation sustainability and provide a basis for continued interest rate hikes in the coming months. Reuters cited three sources familiar with the BOJ’s thinking as reporting that a series of recently released data has boosted the central bank’s policymakers’ confidence, leading them to believe that core inflation—excluding one-off factors and reflecting broader demand and wage changes—has now roughly reached 2%. Markets currently widely view December as a key window for the next interest rate hike. If the BOJ confirms that core inflation has reached around 2%, it will further strengthen market expectations that Japan is entering a sustained phase of policy normalization.