The Bank of Japan is considering raising its policy rate to around 1.25% at its September Monetary Policy Meeting. If implemented, this would be the first rate hike in 3 months, bringing the rate within reach of its highest level since 1995.
At its Monetary Policy Meeting scheduled for 17 and 18 September, the Bank of Japan is considering raising the current rate of around 1% to approximately 1.25%. If implemented, this would be the first rate hike in 3 months.
Ahead of the meeting, the BOJ is exploring a short-term rate increase to contain inflation risks arising from soaring oil prices and the weaker yen. The increase is expected to be 0.25 percentage points.
Since ending its large-scale monetary easing in March 2024, the BOJ has repeatedly raised rates at intervals of approximately 6 months. If it raises rates at this meeting, the interval between hikes could be the shortest on record.
The benchmark policy rate is expected to reach its highest level since 1995, while expectations are growing that core inflation will continue to exceed the 2% target. BOJ officials have indicated that they are prepared to accelerate the pace of rate hikes to contain rising prices.
BOJ officials have reportedly expressed the view that the pace of rate hikes could accelerate depending on price trends, and fiscal authorities have also indicated a stance supportive of this point.