The Bank of Japan is widely expected to raise its policy rate from around 1.0% to around 1.25% at its monetary policy meeting on the 17th and 18th, according to reports. With the Bank alert to the risk of higher inflation, it is expected to make a final decision on whether to raise rates again.
The Bank of Japan is reportedly widely expected to raise its policy rate from the current level of around 1.0% to around 1.25% at its monetary policy meeting on the 17th and 18th. The expectation that strong inflationary pressures will persist is said to be behind the view, suggesting that the Bank may judge another rate hike necessary to achieve price stability.
If the rate hike goes ahead, the Bank of Japan's policy rate will reach its highest level in about 31 years, since April 1995. The rate level is also expected to influence floating-rate home loans and corporate borrowing costs, while external factors, including the impact of the situation in the Middle East on prices, have been cited as key considerations in the final decision.
Since ending its large-scale monetary easing program in March 2024, the Bank of Japan has raised rates 5 times, generally at a pace of once every six months. It also decided to raise rates at its most recent meeting in June, and another hike at the meeting 3 months later could mark the first such case in the current series of rate increases. The Bank of Japan will make its final decision after assessing the impact of the situation in the Middle East on raw material and energy prices.