An inflation indicator closely tracked by the Bank of Japan is jumping to a seven-month high

An inflation indicator in Japan closely watched by the Bank of Japan (BOJ) hit a seven-month high in November, which could prompt the central bank to raise interest rates early next year.

The so-called “core-core” inflation rate, which excludes fresh food and energy prices and is tracked by the BOJ, rose from 2.3% to 2.4%the highest level since April.

The core inflation rate – which takes into account fresh food prices – was 2.7%, up from 2.3% in October and above the 2.6% forecast by economists polled by Reuters.

Headline inflation rose to 2.9% from 2.3%, reaching its highest level since August.

The readings take place the day after The Bank of Japan kept interest rates stable at 0.25%. surprising economists who expected a 25 basis point increase.

The Bank of Japan said in its statement on Thursday that the decision to stay the course was a split 8-1 decision, with board member Naoki Tamura supporting a 25 basis point hike.

Tamura believed that inflation risks were more to the upside and suggested the bank raise interest rates during the meeting.

BOJ Governor Kazuo Ueda reportedly said in a press conference on Thursday that the BOJ can only raise interest rates slowly because underlying inflation is only rising at a “moderate pace,” he said.

However, Ueda added that the central bank is aware that if it delays raising rates for too long, it will have to accelerate rate hikes at future meetings.

The BOJ “will soon resume its tightening cycle,” Marcel Thieliant, head of Asia Pacific at Capital Economics, said in a statement after the decision. Capital Economics expects a rate hike in January following new economic forecasts.

Thieliant added: “It is worth noting that unlike in October, the decision to leave interest rates unchanged was not unanimous,” citing Tamura’s vote to raise interest rates to 0.5%.