The Bank of Japan is widely reported to be planning to raise its policy rate from the current 1.0% to 1.25% at its monetary policy meeting on 17–18, in response to inflation driven in part by rising crude oil prices.
The Bank of Japan is reportedly planning to raise its policy rate from the current 1.0% to 1.25% at its monetary policy meeting on 17–18. The 1.25% rate would be the highest level since 1995. Previous rate hikes had been spaced about six months apart, but the interval this time is expected to be about three months, making the Bank’s stance of accelerating rate hikes more apparent.
The move is reportedly aimed at addressing inflation driven by rising crude oil prices. At the same time, some view it as reflecting an intention to accelerate the normalization of monetary policy. Debate over the pace of normalization is still ongoing.
Some observers say the market has already priced in a rate hike to 1.25% on 18 September. Other reports have focused on the impact of the rate hike on markets, including the yen exchange rate and the intervention policies of Japan and the United States.
On the assumption that the current rate hike will be implemented, some have expressed the view that the next rate hike will also need to be expedited.