The prices for imports have increased to 24.8% from the previous year. The cost of imports may influence inflation as businesses pass costs to consumers. These conditions suggest that BoJ may increase interest rates in December.

Japan will release the GDP data on 16 November and inflation data for October on 20 November. The market expects annualized growth of 0.3% which is down from 1.4% in Q2. The expectations for core inflation are 2.3% which is up from 2.1% in September. These expectations also support the rate hike in December. If the GDP data suggest slowdown and inflation is softer, it would give the BOJ room to wait. If inflation is hotter than expected, it will increase the expectation of rate hikes in 2027.

Inflation in the US is also high which is keeping pressure on the Fed to raise interest rates. The chart below shows that consumer prices increased by 0.35% in October while core prices increased by 0.3%.