The Bank of Japan is expected to hold a policy meeting on the 18th and raise its policy rate from the current 1.0% to 1.25%. The response to inflation risks, including surging crude oil prices, has been cited as the background.
The Bank of Japan is holding its monetary policy meeting on the 17th and is expected to raise its policy rate from 1.0% to 1.25% on the 18th. The report, attributed to sources familiar with the matter, says the formal decision is still pending an announcement.
The background includes surging crude oil prices due to the situation in the Middle East, as well as rising business-to-business transaction prices, which have remained at high levels. These factors are expected to affect consumer prices going forward. There have also been reports that some within the Bank of Japan have pointed to the need to curb inflation.
Meanwhile, the interest rate gap between Japan and the United States is not expected to close fully following the US Federal Reserve's decision to raise rates, and some view the outlook for correcting the yen's depreciation as unclear. The impact of this rate hike on the foreign exchange market will depend on the market's response going forward.
The Bank of Japan plans to make a formal decision on the 18th to contain these inflation risks.