The Bank of Japan has begun making arrangements to decide on an additional rate hike at its Monetary Policy Meeting on the 17th and 18th. If it raises the target range for the policy rate from the current level of around 1.0% to around 1.25%, as expected, the rate will reach a level not seen since 1995, approximately 31 years ago.
The Bank of Japan is reportedly making arrangements to decide on another rate hike ahead of its Monetary Policy Meeting on the 17th and 18th. Against a backdrop of risks that surging crude oil prices and the trend toward yen depreciation will push up prices, the Bank is considering raising the target range for the policy rate from the current level of around 1.0% to around 1.25%.
The hike is expected to be the usual 0.25 percentage points. If approved, the decision would mark the Bank of Japan's departure from its accommodative policy stance of recent years and raise interest rates to their highest level in approximately 31 years.
Many within the Bank of Japan believe that rates should be raised in stages, while maintaining accommodative financial conditions, to address the risk that the underlying rate of price increases will remain above 2%. In remarks following the previous Monetary Policy Meeting, officials also suggested that the pace of rate hikes could accelerate depending on price developments.
Market participants have pointed to the possibility that comments by US Treasury Secretary Bessent could also affect the rate-hike decision. He expressed the view that Japan should take decisive action to correct the yen's depreciation.