A measure of inflation closely tracked by the Bank of Japan jumped to its highest level in seven months

Japan’s measure of inflation, which the Bank of Japan closely monitors, reached a seven-month high in November, which could prompt the central bank to raise interest rates early next year.

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

Core inflation – which does not include fresh food prices – was 2.7%, up from 2.3% in October and above the 2.6% forecast of economists polled by Reuters.

The headline inflation rate rose to 2.9% from 2.3%, reaching its highest level since August.

The readings come the day after Bank of Japan keeps interest rates steady at 0.25% It surprised economists who had expected a 25 basis point increase.

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

Tamura sees inflation risks becoming more skewed to the upside, and suggested the bank could raise interest rates during the meeting.

Bank of Japan Governor Kazuo Ueda reportedly said at a press conference on Thursday that since core inflation is only increasing at a “moderate pace,” the Bank of Japan may be slow to raise interest rates.

However, Ueda added that the central bank was aware that if it waited too long to raise interest rates, it would have to accelerate rate hikes at future meetings.

Speaking to CNBC,Squawk Asia FundThe inflation rate is “broadly in line with what we think,” said Masahiko Lo, chief fixed income strategist at State Street Global Advisors.

He added that the Bank of Japan is “very optimistic” about the country’s inflation and growth numbers, but Ueda is likely to focus on external uncertainties, namely the impact of the incoming Donald Trump administration.

The yen fell against the US dollar after the Bank of Japan’s decision to suspend interest rates. It reached 157.92 on Friday, its weakest level since July. However, the currency later strengthened again.

Lu explained that with the yen now “drifting” towards the 160 level against the dollar, the Japanese Ministry of Finance may try to issue warnings to the market, or, failing that, it may impose an interest rate hike in January in an attempt to support the yen.