Sources say the BoJ may raise rates next month and accelerate hikes due to yen weakness and rising price pressures.
The Bank of Japan is poised to raise interest rates as early as September, marking a shift from its current pace of roughly two hikes per year. The move reflects concerns over persistent yen weakness, Middle East conflict-driven inflation, and strong global AI demand, according to sources familiar with the central bank’s thinking.
The BoJ last adjusted rates in July, maintaining a cautious approach despite inflation hovering near its 2% target. Analysts had expected gradual tightening, but recent geopolitical and currency pressures may prompt a faster response. The yen’s decline has persisted despite a rare joint US-Japan currency intervention last month.
At publication, the USD/JPY pair traded 0.04% lower at 159.43, signaling cautious market reaction to the potential policy shift.