BOJ Set to Hold Steady as Japan Grapples with Oil Prices, Earthquake Fallout

The Bank of Japan (BOJ) is set to keep its benchmark interest rate unchanged at its two-day policy meeting from Thursday. The central bank raised the key rate in June for the first time since December, warning that higher crude oil prices and a weak yen could strengthen inflation risks.

Many BOJ watchers expect the Policy Board to maintain the rate at 1.0 percent as the central bank assesses the impact of its recent rate hike to a 31-year-high. The economy is heavily reliant on fuel imports, which have been disrupted due to the Middle East conflict.

The BOJ will also monitor the fallout from a magnitude 7.1 earthquake that struck Kumamoto Prefecture and nearby areas, home to major automakers such as Toyota Motor Corp. and semiconductor makers like Taiwan Semiconductor Manufacturing Co.