NOTE: On 1st November, US clocks change. Therefore, the LN-NY time difference reverts from 4hrs to 5hrs.

• MON: Chinese NPC Standing Committee (2-6 Nov), Global Manufacturing Final PMIs (Oct), US ISM Manufacturing (Oct)
• TUE: Holiday: Japanese Culture Day, RBA Policy Announcement & SoMP (Nov), US Midterm Elections, South Korean CPI (Oct), Swiss CPI (Oct), US JOLTS (Sep), US Factory Orders (Sep)
• WED: Riksbank Policy Announcement (Nov), NBP Policy Announcement (Nov), BCB Policy Announcement (Nov), US Treasury Quarterly Refunding Announcement, US Treasury Buyback (Liquidity Support; 10Y-20Y), South African Municipal Elections, New Zealand Jobs (Q3), Global Services Final PMIs (Oct), EZ Flash CPI (Oct), US ADP (Oct), US Balance of Trade (Sep), US ISM Services (Oct), Canadian Balance of Trade (Sep)
• THU: BoE Policy Announcement & MPR (Nov), Norges Bank Policy Announcement (Nov), CNB Policy Announcement (Nov), Banxico Policy Announcement (Nov), BoJ Minutes (Sep), Canadian Federal Budget, Australian Balance of Trade (Sep), German Factory Orders (Sep), Swedish CPIF Flash (Oct), French Industrial Production (Sep), EZ PPI (Sep), US Challenger Job Cuts (Oct)
• FRI: German Industrial Production (Sep), EZ Retail Sales (Sep), US NFP (Oct), Canadian Jobs Report (Oct), US UoM Survey Prelim (Nov)

NEWSQUAWK WEEK AHEAD

CHINESE NPC STANDING COMMITTEE (MON-FRI): The 25th session of the 14th NPC Standing Committee will run from 2nd-6th November, with the draft agenda comprising ten legislative bills and eight oversight reports. Market attention is focused on fiscal policy, but the draft agenda currently contains no fiscal items, including any changes to the debt quota. The addition of such items would therefore be a notable surprise.

US ISM MANUFACTURING PMI (MON): The headline ISM manufacturing PMI is seen rising a little to 54.7 in October (prev. 54.5 in September). As a proxy, S&P Global’s flash manufacturing PMI edged up to 56.0 in the month (vs 55.9 in September), a 53-month high and the strongest improvement in operating conditions since May 2022. The manufacturing output index, however, slipped to 55.8 (from 56.2), a two-month low. Under the bonnet, production and new orders growth both slowed but stayed elevated, while export orders for goods rose for the first time since June last year. Backlogs of work built up at a faster rate, and input inventories rose at the quickest pace in four months. Supply chains again supported the headline, with supplier delivery times lengthening to the highest since July 2022. Respondents cited material shortages, low stock levels and shipping or import delays. On prices, cost pressures rose most sharply in manufacturing. Firms cited oil-based inputs, energy, fuel and freight, alongside steel, aluminium and copper, often due to tariffs or shortages. Factory selling price inflation accelerated markedly to the fastest since July 2022. On jobs, factory payrolls rose at the fastest rate since March 2012. S&P said sentiment improved markedly in manufacturing, with factory confidence more or less back to its long-run average and manufacturers more upbeat than service providers.

RBA ANNOUNCEMENT (TUE): The RBA will decide on rates next week, with money markets pricing in around a 79% probability that the central bank will raise the Cash Rate Target by 25bps to 4.85%, compared with around a 21% probability of rates remaining at the current 4.60%. As a reminder, the RBA hiked rates by 25bps to 4.60% at its last meeting in September, as expected, marking the central bank’s fourth rate increase this year. The decision was unanimous, while the language remained hawkish, with the RBA noting that inflation remains elevated and some of the upside risks identified in August are materialising. The Board reiterated that it would continue to take whatever action it considers necessary to return inflation sustainably to target, including raising the Cash Rate Target further if required. The RBA also stated that the conflict in the Middle East had widened, global energy prices were significantly higher than assumed in the August forecast, and recent inflation outcomes in Australia were stronger than anticipated at the previous meeting. At the subsequent press conference, RBA Governor Bullock struck a more dovish-than-usual tone. Although she stated that inflationary pressures would persist for longer than expected and that the Board would raise rates again if needed, she also noted that further hikes might not be necessary if inflation declined and expressed hope that the four rate hikes already delivered would be sufficiently restrictive to slow inflation. However, inflation has since accelerated, with Australian Monthly CPI for September and Quarterly CPI for Q3 both rising and either matching or exceeding forecasts. Meanwhile, the latest rhetoric from the central bank has been hawkish, with RBA Governor Bullock recently acknowledging that higher interest rates can be challenging but stressing that elevated inflation cannot be allowed to persist. She also noted that oil and related prices had risen sharply again and would contribute materially to inflation. Furthermore, Bullock stated that inflation was likely to exceed the August base-case forecast, upside inflation risks were materialising and inflation remained far too high.

US MID-TERM ELECTIONS (TUE): On November 3rd, voters head to the polls to decide 35 Senate seats, all 435 House seats, 36 governorships, and public utility commissioners in 9 states. Midterm elections, which take place two years into a presidency, are viewed as a referendum on the ruling party’s handling of key issues. 35/100 Senate seats are up for election, of which 22 are held by Republicans and 13 by Democrats. Polls show the Senate race remains close, with the majority of key races in Republican-held seats, leaving the party vulnerable (Alaska, Iowa, Kansas, Maine, Ohio, Texas, and North Carolina). Polymarket gives the Democrats a 69% chance of winning the Senate and a 94% chance of taking the House, where all 435 seats are up for election. Balance-of-power betting odds have increasingly favoured a Democratic sweep, following President Trump’s declining approval ratings amid an Iran war that has weighed on the cost of living for Americans through higher diesel and gasoline prices. Polymarket odds of congressional outcomes are: Democratic sweep (70%); Democratic House and Republican Senate (24%); and Republican sweep (7%). Extra focus will be on gubernatorial and Public Utility Commission (PUC) commissioner elections, as near-term data-centre policy is likely to be set at the state level. For a full preview, please click here.

SWISS CPI (TUE): September’s series was steady, amid contrasting trends from energy upside and pressure on holidays, rentals and other activity. This potentially highlights a trade-off in consumer spending amid elevated energy prices, with households limiting expenditure elsewhere and moderating price pressures in those areas. The dynamic could persist given the marked rise in global energy benchmarks in October. For the SNB, they forecast inflation ticking up to 1.2% Y/Y on average across Q4 vs a 0.7% for Q3. While a jump, as long as the pressures remain largely confined to energy, i.e. no strong second round effects, then inflation remains comfortably within the 0-2% target range, and thus calls to tighten should not increase unduly.

RIKSBANK ANNOUNCEMENT (WED): The Riksbank is expected to raise its policy rate by 25bps to 2.00%, having held at 1.75% in September and signalled that rate increases were expected to begin this year if the outlook remained unchanged. The September rate path implied a Q4 average of 1.85% and 2.07% in Q1 2027, while the Riksbank said it would raise rates faster if inflation showed signs of a larger, more persistent upturn. Following that meeting, Nordea, SEB, Handelsbanken and ING all called for a November hike. Since then, Governor Thedeen has said there are strong reasons to raise the policy rate in the near term, Bunge said a hike is probably justified by end-2026, and Deputy Governor Jansson flagged an increasing risk of higher energy prices feeding into broader inflation. On the data front, September CPIF rose to 1.5% Y/Y (prev. 0.7%), in line with expectations, although CPIF ex-energy was softer at 0.5% (exp. 0.7%). Activity has been firmer, with Q3 flash GDP at 0.4% Q/Q (exp. 0.3%), while October consumer inflation expectations jumped to 7.7% (prev. 6.3%). Unemployment, however, remains elevated at 8.6%.

US QUARTERLY TREASURY REFUNDING ANNOUNCEMENT (WED): The US Treasury’s Quarterly Refunding Announcement is due on Wednesday, following the release of quarterly financing estimates on Monday. In Q3, the Treasury projected borrowing of USD 739bln in privately held net marketable debt, assuming an end-September cash balance of USD 950bln, USD 68bln higher than initially projected. The preliminary Q4 guidance, which will be updated on Monday, projected borrowing of USD 628bln, assuming an end-December cash balance of USD 850bln. Within Wednesday’s refunding announcement, attention will focus on any adjustments to the Treasury’s longstanding guidance that it “anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters”. Buyback operations will also be in focus. In August, the Treasury increased the size of its long-end liquidity support buybacks from September 9th to at least USD 4bln per operation, compared with a previous maximum of USD 4bln. The Treasury has since conducted multiple operations with a maximum size of USD 6bln in both the 10-20yr and 20-30yr sectors. The August announcement noted that further information on future buyback sizes would be provided at this quarterly refunding. Notably, the Primary Dealer Questionnaire sought feedback on the buyback programme, including what additional changes the Treasury should consider to enhance its effectiveness. Regarding TIPS, Barclays expects no changes to issuance sizes, forecasting the November 10yr reopening at USD 19bln, December 5yr reopening at USD 24bln and January 10yr reopening at USD 21bln.

US ISM SERVICES PMI (WED): ISM Services PMI is expected to ease to 54.7 (prev. 54.9). As a proxy, S&P Global’s flash services business activity index slipped to 57.9 in October (vs 58.8 in September), a two-month low, though S&P said that the rate of expansion remained among the highest seen over the past five years. The composite output index also eased to 57.6 (from 58.4), still the second-sharpest increase in activity since March 2022. Under the bonnet, demand strengthened, with services new business growth improving to the strongest since March 2022, while services exports posted their largest rise since July 2023. Backlogs of work accumulated at a stronger rate. On jobs, the service sector payroll gain was below that seen in September, but still the third largest in over four years. On prices, service sector costs again rose sharply, with providers widely citing higher wage rates and increased utility and insurance costs, alongside oil-based inputs, energy and fuel. Services selling price inflation edged up to the steepest since August 2022. S&P said optimism was pared back in the services economy, with service providers’ sentiment remaining well below its trend level amid worries over the cost of living, higher borrowing costs and political uncertainty.

EZ FLASH CPI (WED): September’s final HICP confirmed headline inflation at 3.8% Y/Y (prev. 3.2%), its highest since September 2023, with core inflation at 2.5% (prev. 2.4%) and services inflation at 3.2% (prev. 3.0%); M/M prices rose 0.6%. Energy has been the main driver amid the Middle East conflict. National flash readings have been mixed so far: French HICP came in above expectations at 3.8% Y/Y (exp. 3.6%, prev. 3.4%), while Italian HICP surged to 5.6% (exp. 4.6%, prev. 4.2%). Spanish HICP was in line with expectations at 4.9% (prev. 5.0%), while German inflation also cooled. Elsewhere, the ECB’s Q4 Survey of Professional Forecasters revised up headline and core inflation expectations for 2026 and 2027.

BOE ANNOUNCEMENT (THU): Set to kick off a tightening cycle with a 25bps hike. The initial focus point will be on the vote split, to see if the dovish contingent is on board or not. Thereafter, commentary on the growth backdrop and tightening of domestic and global financial conditions will be scrutinised for clues into the likely magnitude of the tightening cycle, and for an early assessment on when the BoE may return to on-hold and then an easing-bias, given the points of concern highlighted by policymakers YTD. The month’s data has by and large cemented a November hike, but there is a lot of uncertainty on the path thereafter, which will be the dominant focus point for the statement, forecasts and press conference.

NORGES BANK ANNOUNCEMENT (THU): Norges Bank is expected to hold its policy rate at 4.50%, following a 25bps hike in September, its second increase this year. At that meeting, Governor Wolden Bache said it would likely be necessary to keep rates elevated for some time and that the Committee was prepared to raise rates further if warranted by the inflation outlook. The rate path showed the policy rate remaining close to current levels for a period before declining somewhat, with inflation not expected to return to 2% until 2029. Nordea said the path implied a 40% chance of another hike over the next six months, with no cuts forecast before 2028. Since then, data have been softer, with September CPI-ATE unchanged at 3.0% Y/Y (exp. 3.1%) and headline CPI at 3.4% (exp. 3.6%), while LFS unemployment jumped to 5.0% (prev. 4.5%). The November meeting will not be accompanied by a Monetary Policy Report, leaving the focus on whether the Committee maintains its tightening bias.

BANXICO POLICY ANNOUNCEMENT (THU): At its last meeting, Banxico left rates unchanged at 6.50%, as expected, in a unanimous decision. However, the central bank adjusted its guidance, saying future decisions will consider the ongoing disinflation process and the expected behaviour of its determinants, including exchange-rate pass-through to consumer prices, slack conditions and inflation expectations. Previously, Banxico had said the Governing Board judged it appropriate to keep the reference rate at its current level. Heading into this meeting, Pantheon Macroeconomics says Mexico’s stronger retail sales and industrial output have prompted it to raise its Q3 GDP growth forecast, although weak employment and subdued confidence threaten to limit momentum heading into next year. Pantheon adds that persistent services inflation reinforces its view that Banxico will leave rates unchanged until Q3 2027.

US JOBS REPORT (FRI): The consensus looks for the US economy to add 55k nonfarm payrolls in October (vs 29k in September), with the unemployment rate expected to remain unchanged at 4.2%. Average hourly earnings are seen rising by 0.3% M/M (prev. 0.1%), with the annual rate easing to 2.9% Y/Y (prev. 3.0%). Analysts at Barclays are slightly below consensus, forecasting 50k for both headline and private payrolls, while expecting government employment to remain broadly flat. The bank says that barring any revisions, this would lift the three-month average to 71k, well above the bank’s estimate of the breakeven pace, which is around zero. Its analysts say that uncertainty is elevated, noting that its models, which usually rely on weekly jobless claims data, point to strong gains, while its alternative indicator models suggest more modest hiring; it adds that seasonal factors also remain a key risk. On the jobless rate, Barclays expects a 0.1ppt fall to 4.1%, arguing that September’s strong labour force gains, which nudged the rate up to 4.175% from 4.141%, will not persist. It points out that weekly initial jobless claims have not risen since the September BLS reference week; it doubts that the October data will resolve the divergence between the payroll and household surveys.

CANADIAN JOBS REPORT (FRI): The Canadian jobs report may help shape expectations for further BoC rate hikes following its decision to raise rates this week. However, the decision was primarily driven by inflation concerns, with the BoC making only limited reference to the labour market, noting that the unemployment rate has been around 6.5% for several months. It also acknowledged that a broad set of indicators continue to point to some excess supply in the economy. The BoC noted that growth projections are stronger than those in the July MPR, although inflation is now expected to average 3% in 2027, a percentage point above the July projection. The BoC signalled that further hikes may be needed, although the Governing Council agreed to proceed carefully. A strong jobs report would make it easier for the BoC to consider further tightening, particularly if the labour market shows signs of resilience. However, September saw a 68k decline in employment, with the unemployment rate ticking up to 6.5%, following a 42k decline in August. Despite the recent weak employment reports, the deterioration was not enough to deter the BoC from hiking, given its inflation concerns and stronger growth outlook.

NEWSQUAWK WEEK IN REVIEW

CHINESE FIFTH PLENUM REVIEW: The CPC Central Committee’s fifth plenary session concluded on 29th October in Beijing, with President Xi delivering a work report on behalf of the Politburo. As expected, the session focused on governance and discipline rather than the economy, with no significant immediate market-relevant developments to report.

ISRAELI LEGISLATIVE ELECTION REVIEW: The election produced an inconclusive result, with neither bloc securing the 61 seats required for a Knesset majority. The Central Elections Committee’s final count showed Netanyahu’s bloc winning 53 seats, Eisenkot’s bloc 48 and the Arab-led parties a record 19. Likud remained the largest party with 27 seats, ahead of Eisenkot’s Yashar with 21. Israel’s Channel 14 reported that President Herzog was pushing for a Netanyahu-led government for two years in exchange for Netanyahu’s resignation at the end of the term and a full pardon in his trial, although the report was subsequently denied. Geopolitically, a change of government is unlikely to soften Israel’s stance on Iran.

FED POLICY ANNOUNCEMENT REVIEW: The Fed held rates at 3.75-4.00%, as expected, with Cook and Hammack dissenting in favour of a 25bps hike, with Cook’s dissent being a particular surprise. The statement, largely unchanged, added that further information will help determine the policy stance needed for a timely return of inflation to the 2% goal, while upgrading growth language to “strong” from “solid”. In his post-meeting press conference, Fed Chair Warsh said the US economy is strong and pointing in the right direction, with Q3 GDP likely running above 3%, and business investment rising at a double-digit pace. He said the Fed is tightening financial conditions, and is “not uncomfortable” with that, emphasising that the Fed remains committed to returning inflation to its 2% goal. Warsh noted that the FOMC will continue to meet eight times a year, but one meeting in 2027 and two in 2028 will be devoted to broad strategy talks without any interest rate votes (seven meetings in 2027 will include a rate vote, falling to six in 2028). Writing after the meeting, Goldman Sachs Asset Management’s fixed income chief investment officer Kay Haigh said the Fed’s pause in raising interest rates will likely be short-lived, and expects a resumption of hikes in December. Goldman said that September’s strong CPI print shows upside inflation risks remain, adding that another rise in energy prices or further strong data could bring additional tightening into play next year. Meanwhile, Treasury Secretary Bessent said further Fed rate hikes would not necessarily be mistakes, though urged policymakers to consider transitory energy-driven inflation, and noted that bond markets have already tightened financial conditions.

BOC POLICY ANNOUNCEMENT REVIEW: The BoC hiked rates by 25bps as expected, a pre-emptive move aimed at preventing second-round effects from higher energy prices and the de-anchoring of inflation expectations. The central bank pointed towards higher inflation and economic growth projections than seen in the July MPR, leaving open the possibility of further tightening, although, given the uncertainties, the Governing Council agreed to proceed carefully. The main arguments for the rate hike were higher energy prices, the expectation that they will persist and building cost pressures. Meanwhile, the main argument for holding was that the rise in inflation has so far been concentrated in energy prices and in services that rely heavily on energy inputs; additionally, economic slack remains, and new US tariffs will weigh on growth. The neutral rate estimate range was kept at 2.25-3.25%, leaving the current 2.5% closer to the midpoint. In the press conference, Governor Macklem said rates are low enough not to restrain economic growth and that inflation is looking less likely to be well contained. Money markets now price in 13.3bps of further tightening by year-end.

RBNZ POLICY ANNOUNCEMENT REVIEW: The RBNZ surprised markets by holding the OCR at 2.75%, against expectations for a 25bps hike to 3.00%, with money markets having priced in around a 93% chance of an increase. The decision came on a narrow 4-3 vote, with Breman, Hansen, Gai and Williams voting to hold, while Conway, Gourley and Silk favoured a hike. Members agreed on the inflation outlook but differed over the weight assigned to various risks and the timing of the policy response. The Committee said tighter policy would likely be required but remained dependent on the economic outlook, while the minutes flagged the risk of inflation becoming entrenched. NZD/USD slumped following the decision. Governor Breman subsequently said the OCR would likely rise further at upcoming meetings and that the chances of a December hike were high, although MPC member Hansen later described the likelihood of a December move as 50-50. Westpac, which had expected a hike, now forecasts a data-dependent increase to 3.00% in December and a peak OCR of 4.00% in September 2027. However, it cautioned that a December move “is not a done deal” and would depend on fuel prices, inflation expectations and second-round pricing pressures. The next decision is scheduled for 9th December.

UK AUTUMN BUDGET REVIEW: A budget that alleviated some of the fears heading into it. However, further tests are on the horizon, namely the welfare-related reviews, 2027 spending review, the expected first BoE hike, EU-UK summit and continued cost of living pressures. Additionally, speculation around a potential early election remains. In brief, Chancellor Healey announced various measures to support households and, to some extent, businesses in the current economic climate. To fund these, she increased the bank surcharge, although not by as much as feared. Leaving headroom of GBP 14.5bln, roughly in-line with consensus. The DMO, as expected, once again adjusted the allocation away from the long-end, to the benefit of Gilts, while the OBR’s full release and scrutiny within it weighed modestly on Gilts at the time; net, a positive reaction, however.

AUSTRALIAN CPI REVIEW: Australian inflation came in hotter than expected, with headline CPI rising to 4.3% Y/Y in September (exp. 4.2%, prev. 4.0%) and 0.8% M/M (exp. 0.7%). Quarterly headline measures were in line with expectations, with Q3 CPI at 1.3% Q/Q and 3.9% Y/Y. However, the RBA’s preferred quarterly trimmed mean rose 1.0% Q/Q (prev. 0.8%), above the RBA’s August forecast of 0.8%, and 3.7% Y/Y (exp. 3.6%). The monthly trimmed mean was in line with expectations at 3.6% Y/Y (prev. revised to 3.5%). Transport inflation jumped to 8.7% Y/Y, with Westpac noting that automotive fuel prices rose 9.4% M/M, while services inflation accelerated to 4.1% (prev. 3.7%). Westpac maintained its view that the RBA will hike again at its 3rd November meeting, with the cash rate currently at 4.60%.

ECB POLICY ANNOUNCEMENT REVIEW: In short, a mixed/hawkish October “no hiking” meeting, with President Lagarde pointing to a December hike. However, the growth side of the equation and tightening of financial conditions are limiting factors for further action. On the latter point, focus is firmly on France, and while Lagarde noted they have the tools to act (i.e. TPI), she avoided any specific comment on the French situation. A modest dovish reaction occurred on the release, as forward guidance was not adjusted, no second round effects were noted and the growth backdrop in focus. Then, Lagarde spurred a hawkish reaction, as she described wage pressure as “moderate”, and pointed to upward pressures on the early stages of the pricing chain. The main reaction came as she outlined that a debate occurred on whether to hike or not, and that the situation could have warranted a move. Following the decision, Reuters sources noted ECB policymakers see a December rate hike followed by a pause. Meanwhile, new ECB staff estimates show the rise in bond yields cutting growth by a cumulative 100bps and inflation by 90bps in 2027-28 vs the September baseline.

US GDP REVIEW: The advance Q3 GDP report showed growth of 3.4%, above the 3.2% forecast and 2.2% prior, and marginally above the Atlanta Fed GDPNow tracker of 3.3%. Within the report, real consumer spending rose 3.8%, matching the Q2 pace, while the PCE price index increased 2.1%, well below the 3.4% forecast and 5.0% previously. Core PCE prices rose 2.5%, above the 2.4% forecast, but cooled from the 3.3% prior. The report noted that the increase in investment primarily reflected gains in private inventory investment and equipment, while the rise in consumer spending reflected increases in both services and goods. Within government spending, the increase was more than accounted for by federal government spending, led by nondefense consumption expenditures. Regarding trade, the decrease in exports primarily reflected a decline in goods, led by petroleum and related products, while capital goods, excluding automotive, accounted for the largest contribution to imports. Warsh acknowledged that Q3 GDP was likely running above 3% and that business investment was likely rising at a double-digit pace. The Fed also upgraded its assessment of economic growth in the statement from “solid” to “strong”. Looking ahead, the Atlanta Fed’s initial GDPNow estimate for Q4 is 3.2%.

US PCE REVIEW: The US September PCE report was broadly in line with expectations. Core prices rose 0.3% M/M (prev. 0.3%) and 3.1% Y/Y (prev. 3.0%), both as expected. Headline prices rose 0.5% M/M (exp. 0.5%, prev. 0.3%) and 3.6% Y/Y (exp. 3.6%, prev. 3.4%). Personal spending rose 0.5%, down from 0.9% and shy of the expected 0.6%, while personal income rose 0.2% (exp. 0.3%, prev. 0.3%). Real personal spending was flat M/M, after rising 0.5% in August. Following the data, WSJ’s Timiraos noted that core PCE services prices ex-housing rose 0.37% in September, lifting the 12-month rate to 3.6%, matching the highest reading since 2024. He added that core goods prices were also firm at 0.20% M/M. Core goods prices were falling Y/Y in 2024 but are now up 2%, and if they keep rising at this pace, the Fed will need more services disinflation to reach its 2% target. Looking ahead, Pantheon Macroeconomics expects core PCE inflation to peak at 3.3% Y/Y in December, up from 3.1% in September, as retailers pass higher producer prices on to consumers. Pantheon adds that services firms have widened their margins this year, but slower consumer demand will likely limit them to cost-only price increases next year. As a result, the consultancy still expects core PCE inflation to fall materially in 2027, to about 2.5% by year-end. It argues that this progress, alongside growing labour market risks, should dissuade the FOMC from tightening further after a final 25bps hike in December, and then persuade it to ease policy from mid-2027.

JAPANESE TOKYO CPI REVIEW: Tokyo inflation was mixed in October, with headline CPI accelerating to 2.8% Y/Y (prev. 2.7%), well below expectations of 3.3%. Core CPI, which excludes fresh food, was in line with expectations at 2.6% (prev. 2.7%), easing for the first time in five months, while the measure excluding food and energy slowed to 2.4% (exp. 2.7%, prev. 2.7%). As a reminder, the figures were released on the same day as the BoJ’s policy decision.

BOJ POLICY ANNOUNCEMENT REVIEW: The BoJ kept its policy rate unchanged at 1.25%, as expected, in an 8-1 vote, with board member Takata dissenting in favour of a hike to 1.50%. Takata argued that the situation had entered a new phase in which the Bank needed to accelerate the process of bringing rates closer to neutral. The BoJ said underlying inflation had reached levels consistent with its price target and that risks to prices were skewed to the upside, while reiterating that it would continue raising rates in response to economic and price developments. It also accelerated its ETF sales to around JPY 860bln annually on a book value basis from January, shortening the disposal period to around 43 years from approximately 112 years. In its Outlook Report, the BoJ raised its FY27 core inflation forecast to 2.6% (prev. 2.4%), while maintaining its FY26 forecast at 2.5% and FY28 at 2.0%. Daiwa had expected the Bank to conclude that underlying inflation had reached 2% and raise its FY27 core inflation forecast to 2.5%. At the press conference, Governor Ueda said all members agreed that underlying inflation had reached 2%, but that it was too early to declare the inflation target achieved. He added that the Bank would assess risks at every meeting, including December, and could not commit to raising rates at fixed intervals.