The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards durably achieving its 2% inflation target. Governor Ueda has said the BOJ will keep raising rates if inflation remains on track to stably hit 2% as it projects.

Japan’s overall consumer inflation continued to slow in October, but a rise in underlying price pressures could further clear the path for the central bank to hike rates in December.

The Bank of Japan is watching service-sector inflation for clues on whether demand-driven price gains are broadening enough to justify further raising interest rates.

A leading indicator of Japan's service-sector inflation held near 3% in October, data showed on Tuesday, offering further evidence that conditions for another near-term interest rate hike by the Bank of Japan were falling into place.