20/10/2026

BIZ & FINANCE TUESDAY | OCT 20, 2026

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BOJ chief says underlying inflation ‘quite close’ to 2% target TOKYO: Bank of Japan (BOJ) governor Kazuo Ueda said underlying inflation is “quite close” to the central bank’s 2% target with strong global AI demand adding to inflationary pressure from a tight job market, signalling scope for further rate increases. price pressure, Ueda said. “Very strong global AI demand is boosting capital expenditure and exports, thereby pushing up prices for a wide range of goods,” he said. Ueda also said raising interest rates at an appropriate pace would help avoid spikes in bond yields. have affected financial conditions, sources have told Reuters. Many market players expect the BOJ to keep interest rates steady at 1.25% but drop hints that leave open scope for a hike to 1.5% as early as December.

Ueda reiterated that emergency bond buying would be reserved for episodes of sharp yield rises or serious market dysfunction. Speaking in the same parliament session, Takaichi dismissed suggestions by some analysts that her administration’s policies had triggered the selloff in the yen and JGBs. “We will meticulously scrutinise the size of fiscal spending and appropriately control the size of debt issuance,” Takaichi said. “By creating a strong economy, Japan can heighten market trust in the yen,“ she added. The JGB market has steadied after the administration sought to dispel perceptions of a reflationist agenda. But analysts expect renewed turbulence if the government fails to clarify how it would fund its tax-cut and big spending plans. – Reuters Banks tap RBI’s first MUMBAI: The Reserve Bank of India’s (RBI) first liquidity infusion in more than three months drew robust demand from banks yesterday, as overnight borrowing rates held near the ceiling of the monetary policy corridor. The operation comes after several months of the central bank absorbing surplus liquidity that hit a record high due to hefty inflows from diaspora deposits mobilised to defend a weak rupee. Large sustained surpluses risk worsening inflation and lifting asset prices. However, interbank short-term borrowing costs rose sharply in recent weeks after the RBI raised rates for the first time in nearly four years earlier this month and signalled further tightening ahead in the face of rising inflation. Yesterday’s operation saw the central bank infuse 1 trillion rupees (RM43 billion) through a seven-day variable rate repo operation, attracting bids worth more than 1.5 trillion rupees ahead of a large tax outflow. “It (RBI’s infusion) is a symptomatic response to volatility in liquidity conditions,” said Sakshi Gupta, an economist at HDFC Bank. “As liquidity surplus has normalised, we are back to fine-tuning operations and further durable liquidity absorption measures like open market sale of bonds or foreign exchange sell/buy swaps may not be needed further.” The weighted average interbank call money rate ended above the Marginal Standing Facility rate for the first time in this financial year on Friday, and was close to that level yesterday. The central bank’s repo rate was at 5.50% and the MSF rate at 5.75%. India’s banking system liquidity surplus eased below 2 trillion rupees to 0.7% of deposits as of Oct 16, for the first time in two and-a-half months. “Since Tuesday is a holiday, we will witness a large chunk of goods and services tax outflows today itself, which must have necessitated a timely intervention,” a trader with a private bank said. – Reuters quarter apartment sales in the capital Hanoi fell 26% compared with the previous quarter and 48% from a year earlier, while secondary market prices fell for the third consecutive quarter. Market conditions also remained “challenging” in Ho Chi Minh City, Vietnam’s largest city and business hub, Savills said. “Rising mortgage rates are one of the factors putting pressure on the market,” said Do Thi Thu Hang, Savills Hanoi Advisory Services director. – Reuters cash auction in three months as market rates spike

Japanese government bond (JGB) yields have risen on prospects of further BOJ rate hikes and concerns that Prime Minister Sanae Takaichi’s big spending plans could worsen the country’s already strained finances. When asked by an opposition lawmaker about the impact of fiscal spending on inflation, Ueda said increased expenditure would push up price and wage growth by stimulating the economy. But if increased fiscal spending boosts Japan’s supply capacity, that in turn could help moderate inflation in the long run, he added.

The remarks came ahead of the central bank’s key policy meeting later this month, where it will release fresh quarterly growth and inflation forecasts which will be scrutinised by markets for clues on the next interest rate hike timing. “It is becoming more important to anchor underlying inflation around our 2% target,” Ueda told parliament yesterday. While rising raw material costs from the Middle East conflict were pushing up inflation, a tight job market and moderate economic recovery were also applying demand-driven

“As underlying inflation approaches 2% and financial conditions remain accommodative, failing to adjust our policy rate appropriately could push up long-term interest rates by stoking market concern over an inflation overshoot,” he said. The BOJ has a two-day policy meeting that concludes on Oct 30. Having just raised rates in September, many in the BOJ are cautious about delivering another hike this month and prefer to gauge more data on how past rate increases

China’s Q3 GDP growth narrowly beats forecasts

BEIJING: China’s economy grew slightly more than expected in the third quarter, but yesterday’s figures still came in at the lower end of the government’s full-year target, as the global energy shock and weak domestic demand counter surging exports. The world’s second-largest economy has charted a diverging path in recent years, with an AI-fuelled export boom masking the impact of a persistent real estate crisis and gloomy consumer sentiment. Gross domestic product expanded 4.5% in July-September, according to the National Bureau of Statistics (NBS). The reading was an improvement on the previous quarter’s 4.3% expansion and just ahead of the 4.4% predicted in an AFP poll of economists. Beijing is hoping for annual growth this year of 4.5%-5.0%, its lowest goal in decades. NBS deputy head Mao Shengyong described the international context as “complex and volatile” during a news conference following the data’s publication. He added that domestic demand was “insufficient”. In late September, Beijing rolled out mortgage subsidies for certain home purchases and support for infrastructure investment, seeking targeted boosts for the economy as activity flagged. While consumer activity has been a drag this year, separate data yesterday showed retail sales rose 1.1% last month, the fastest pace since March. However, Zhiwei Zhang, chief economist at Pinpoint Asset Management, said economic momentum remained “subdued” in September. “After adjusting for inflation, real retail sales o Sept retail sales again lag behind industrial output

Humanoid robots from Leju Robotics work at designated stations on an automobile wheel hub bearing production line at Zhejiang Zhaofeng Mechanical and Electronic’s factory in Hangzhou, Zhejiang province, yesterday. China’s Industrial production grew 5.5% year-on-year in September. – AFPPIC

barely grew compared to one year ago,” he wrote. He added that the better-than-expected GDP numbers could dissuade the government from enacting “significant” policy shifts in the fourth quarter to achieve annual targets. Industrial production grew 5.5% year-on year in September, the NBS also said yesterday, up from 5.2% the previous month. That increase was “helped by strong foreign demand”, wrote Nguyen Hoang Nam of Capital Economics. But fixed-asset investment sank 7.2% during the first nine months of the year combined, the data showed. Yesterday’s data showed retail sales again lagging industrial output, while the property market was still in a downturn, having significantly eroded household wealth for the

past five years. Together with last week’s releases showing soft consumer inflation and exports soaring by more than a third, a picture emerges of an economy increasingly dominant in global markets but struggling to generate prosperity at home. Mao said the 4.6% growth in the first nine months of the year was “hard won”, acknowledging “unbalanced and inadequate development.” High-end manufacturing, “the digital economy” and “modern services” contributed more than 40% of the growth over the period. Unemployment inched lower to 5.2% in September, but economists say the figures are flattered by a growing gig economy. Anyone working even one hour a week is considered employed. – AFP, Reuters

Vietnam orders lenders to cut lending rates as property market slows HANOI: Vietnam’s central bank has ordered commercial banks to cut lending rates for businesses, with rising mortgage rates hurting the real estate market, a key driver of economic growth. maturities of six months or more and stop competing with one another by offering higher rates for savers. avoiding any relaxation of lending standards. The measures are aimed at supporting economic growth while maintaining stability, controlling inflation and safeguarding the banking system, the SBV said.

The central bank warned that lenders failing to comply with government or central bank instructions on interest rates could face tougher requirements and lower credit-growth quotas for next year. The central bank also instructed lenders to channel credit towards productive and priority sectors as well as viable major projects while

Elevated borrowing costs have weighed on business activities, including the real estate market. September annual inflation came in at 5.08%, compared with 4.89% in August and higher than the government’s 4.5% target for the year. Property advisory firm Savills said third

The State Bank of Vietnam (SBV) told lenders to cut annual lending rates for priority sectors by 1.5 to 2 percentage points, it said in a directive issued on Sunday. Banks were also told to reduce listed deposit rates by at least 0.5 percentage points for