The Bank of Japan has firmed its policy of raising the policy rate from around the current 1.0% to around 1.25% at its September meeting, and is reportedly expected to reach its highest level in about 31 years. The final decision will be made at the meeting after reviewing economic and price conditions.
The Bank of Japan reportedly firmed its policy of raising the policy rate to around 1.25% at its meeting on 17 and 18 September, according to sources cited on 8 July. If implemented, this would be the first rate hike since the June meeting and could accelerate the pace of rate hikes for the year.
The background includes the risk that higher oil prices and a weaker yen will push up prices, while the strength of wage and growth indicators is increasing the likelihood of a rate hike. Pressure for higher interest rates in the United States is also reportedly having an impact.
Wage growth remains solid. Nominal wages in July rose 4.7% year on year, exceeding market expectations, while real wages also remained at a high level. The revised GDP figure was raised to an annualized quarter-on-quarter growth rate of 1.4% for the April–June quarter.