The BOJ is highly likely to raise its policy rate to around 1.25% at its policy meeting on 17 and 18 September, marking the first rate hike in 3 months since the June meeting. The central bank may accelerate the pace of rate hikes in response to upside risks to inflation, reports say.
The BOJ is increasingly likely to raise its policy rate to around 1.25% at this month's policy meeting. The move would mark the first rate hike in 3 months since the rate was raised from 1.0% at the June meeting.
At a press conference following the July meeting, Governor Ueda Kazuo (植田和男) cited expanded AI demand, higher crude oil prices stemming from the worsening situation in the Middle East and exchange rate fluctuations as upside risks to inflation, and said that an upside deviation in underlying inflation could not be ignored.
Several other Policy Board members also share concerns about upside risks to inflation and have mentioned the need for an additional rate hike. The market view is that the United States is increasing pressure on Japan to raise rates, while concerns about a weaker yen in Japan are supporting higher prices.
Markets are increasingly pricing in a rate hike at the September meeting with a high probability, while the yen has begun to recover following coordinated intervention.