The Bank of Japan is reportedly closely watching the risk of an upside surprise in inflation and may consider an additional rate hike as early as its next monetary policy meeting, scheduled for 17–18 September.
The Bank of Japan has indicated that, in addition to the higher crude oil prices seen to date, the rapid expansion of AI-related demand and the yen's depreciation are causing the risk of rising prices to increase further. In June, the Bank raised its policy rate to 1%.
At the July meeting, the Summary of Opinions indicated that the pace of rate hikes could accelerate more quickly than the market expects and that it would be necessary to accelerate adjustments to the degree of monetary easing. Several members called for an acceleration in the pace of rate hikes.
The sustained depreciation of the yen reflects currency weakness, which is contributing to imported inflation, and pressure for further yen depreciation remains strong even after coordinated intervention with the United States. Remarks by Treasury Secretary Bessent (ベセント), together with their impact on US media coverage, are also fueling expectations of an early rate hike.
Bank of Japan Governor Ueda has indicated a policy of deepening discussions at upcoming monetary policy meetings and has not ruled out the possibility of an early rate hike.