Riksbank and BoJ raise rates on imported inflation that the core does not show yet
Serguey Asael Shinder1 min readTwo central bank documents released a day apart describe the same decision under pressure. On 4 November the Riksbank raised its policy rate to 2% and said more hikes were likely, even though the measure it considers the best guide to underlying inflation was 1.6% in September, slightly below expectations. On 5 November the Bank of Japan published the minutes of its September meeting, where it raised its rate to around 1.25% by seven votes to two.
Both banks justify tightening by what is coming rather than what is measured. The Riksbank cites supply disruptions linked to the war in the Middle East, higher energy prices and a weaker krona, and expects both CPIF and underlying inflation to rise above 2% next year. The BoJ majority named the Middle East, AI-related demand and exchange-rate movements as the references for timing, and judged financial conditions still accommodative.
The Japanese minutes also record the counter-argument in plain words. Asada Toichiro voted against because CPI excluding fresh food had recently been rising by less than 2%, so the economy could not necessarily be called strong. Sato Ayano saw no substantial acceleration in economic and price developments. Those are the same facts that sit in the Riksbank's own release, the below-target underlying measure, without a dissent attached in the statement.
The common thread is a supply shock that raises headline prices and expectations before it shows up in core measures, combined with currencies that amplify it. Central banks that wait for the core risk acting late; those that move on forecasts risk tightening into weakness, which is the risk both banks list.
What it means
The forecasting call now carries the policy decision in both Stockholm and Tokyo. Watch the Riksbank minutes on 10 November for whether anyone there made the Asada argument.