Bank of Japan to Raise Interest Rates to Combat Inflation and Support Yen

The Bank of Japan is set to raise interest rates again on Friday to combat inflation caused by surging energy prices and support the yen, under pressure from Washington.

Markets are awaiting the US Federal Reserve's decision today after the European Central Bank announced an increase last week.

The BoJ, which meets tomorrow and Friday, is expected to raise its key rate by 0.25 percentage points to 1.25 per cent, the highest level in more than three decades.

Pressure has increased on officials to lift borrowing costs as a spike in oil prices caused by the Middle East crisis continues to drive up inflation.