The Bank of Japan is likely to keep interest rates on hold this week, although the central bank's policy board has not entirely ruled out a rate rise, according to a report on the Web site of Japan's largest business daily.
Echoing a series of Japanese media reports this week, the Nihon Keizei Shimbun (Nikkei) said in its Wednesday online edition that BOJ policy board members are believed to be leaning toward delaying a rate rise until February or later.
Without citing sources, the report said opponents of a rate rise were suggesting the BOJ board wait for economic growth data for the October-December quarter, due in mid-February, before raising interest rates above the current 0.25%.
The BOJ concludes its two-day policy meeting on Thursday.
Although Japan's economy is enjoying its longest expansion in the postwar period, signs of a softening in consumer spending have caused some government officials to worry a premature rate rise by the BOJ could plunge Japan back into deflation.
While many BOJ board members believe Japan's economy remains on a long-term expansion track, some are urging caution about raising rates hastily, given recent lackluster data on consumer spending and prices, the Nikkei said.
The BOJ last raised interest rates in July, its first rate rise in more than six years, amid signs the economy was on a solid recovery track and Japan's almost decade-long battle with falling prices was drawing to an end.
The Japanese yen hit fresh 13-month lows against the dollar on Wednesday, as some investors who had expected a BOJ rate rise this week scaled back their expectations.
Just days ago Japanese newspapers were reporting the BOJ looked set to raise interest rates this week.
Since then speculation has risen in financial markets that pressure from government officials to keep policy on hold could help delay the expected rate hike.
Two government representatives attend BOJ policy meetings in Japan, and although they cannot vote on policy, the representatives are able to voice opinions and request a delay in the vote.
Finance Minister Koji Omi said on Tuesday he saw no need to request such a delay, although other government officials suggested a consensus had not yet been reached. The BOJ is politically independent and any request for a delay would not be binding.
Japan's Kyodo news agency and TBS television also reported on Tuesday that the BOJ now looks unlikely to raise rates this week.