Status quo:

A man going past the Bank of Japan building in Tokyo. The BOJ will review its assessment of prices and the economy at its October meeting, spurring speculation it may ease further then, but stopped short of following the Federal Reserve in adding to its monetary stimulus immediately.

TOKYO: The Bank of Japan (BOJ) will review its assessment of prices and the economy at its October meeting, spurring speculation it may ease further then, but stopped short of following the Federal Reserve in adding to its monetary stimulus immediately.

The BOJ said it needed to pay closer attention to the possibility of losing momentum toward its 2% inflation target as overseas economies continue to decelerate.

Slowing global growth has prompted the Fed and the European Central Bank to cut rates in a fresh wave of easing that the BOJ has so far resisted.

While a majority of economists correctly forecast the central bank’s steady stance yesterday, some predicted a move lower. The yen strengthened to 107.79 against the dollar as of 12:51 pm in Tokyo yesterday after the Boj’s decision to stand pat for now.

Even before yesterday’s call for a review, an increasing number of economists – 83% in the latest Bloomberg survey – say the next policy step will be additional stimulus.

In 2016, the Boj’s call for a comprehensive assessment of policy preceded a large-scale revamping of its easing programme to focus on short- and long-term interest rates.

“The BOJ will review its policy with more easing in mind,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “As (BOJ governor) Haruhiko Kuroda has said, a deeper negative rate is an option, but that will certainly draw criticism from financial institutions.”

Fundamental challenges remain for the world’s third-biggest economy. Inflation stood at 0.6% in July, far from the Boj’s 2% target, and exports have declined every month this year. A sales tax hike taking effect next month is expected to hit domestic demand, which has helped sustain growth during the export slump.

On the international front, there’s a lot that could change between now and the Boj’s next policy review. The United States and China are set to resume high-level trade talks and investors are on edge over any potential retaliatory action after Saudi Arabia said drone attacks that took out about 5% of global oil production were sponsored by Iran.

With such uncertainty, some economists say it’s hard to predict which way the BOJ will turn.

“It’s too early to say further easing is a done deal at the October meeting. The BOJ is just saying that it will review the economy and inflation so it’s not a commitment to take action,” said Chotaro Morita, chief rates strategist at SMBC Nikko Securities in Tokyo.

The BOJ had to be seen doing something after the Fed cut rates, he added.