The Bank of Japan may maintain its stance on interest rate hikes and closely follow government fiscal policy.

According to informed sources, officials from the Bank of Japan believe that there is little need to change the gradual interest rate hike monetary policy stance after Japanese Prime Minister Shizo Abe faced setbacks in the Senate election. Although officials will continue to closely monitor the government's fiscal policy trends, they still consider it appropriate to continue raising the Benchmark Interest Rate if the economic outlook is realized as expected. Informed sources said that the policy committee led by Bank of Japan Governor Kazuo Ueda is likely to keep the rate unchanged at 0.5% in next week's meeting. Given that Japan-U.S. trade negotiations are still ongoing, officials hope to assess the impact of the protocol on inflation trends and economic outlook before raising interest rates again. Informed sources indicated that although the election results will not currently change the Bank of Japan's policy path, some officials believe it is necessary to be wary of the inflation upside risks brought about by significant fiscal easing. Since the surge in prices of food such as rice has pushed inflation rates above expectations, officials have noted that inflation risks are on the rise.