The Bank of Japan is considering raising its policy rate. The move is being attributed to US pressure, higher crude oil prices, growing AI demand and yen depreciation, among other factors, while the Bank of Japan’s meeting is expected to be held over two days starting 17 September.
The United States is said to have decided to raise interest rates in the early hours of 17 September Japan time, and the Bank of Japan is considering raising its policy rate from the current 1% to around 1.25%. The decision-making meeting is scheduled to be held over two days starting 17 September, and the increase could bring the rate to its highest level in about 31 years.
The rate increase is being described as an effort to contain upside risks to prices, with higher crude oil prices, growing AI demand and yen depreciation among the factors involved. US crude oil futures have been trading above $100 per barrel for the first time in three and a half months, and rising prices for AI-related materials and machinery have also been cited.
The Japan-US interest rate differential has been identified as a factor driving yen depreciation and dollar appreciation. The view has been expressed that if Japanese interest rates remain low, the differential will not narrow and the yen’s downward trend will intensify. Remarks by the finance minister on 8 September have also heightened market participants’ sense of caution.