BOJ Chief Hints at September Rate Hike Amid Inflation Concerns

Bank of Japan (BOJ) Governor Kazuo Ueda signalled that there's a strong chance of a rate hike in September, citing concerns over inflationary risks. Speaking at a news conference after attending the G20 finance leaders' gathering in Asheville, North Carolina, Ueda said the BOJ will debate raising interest rates, including in September, to assess whether the likelihood of its economic scenario materialising is heightening and whether upside price risks are increasing.

Ueda's comments came after a meeting with US Treasury Secretary Scott Bessent, who called for 'decisive' monetary steps to combat the weak yen. The hawkish BOJ board member Hajime Takata also echoed similar views, saying that the BOJ should raise rates nimbly in response to inflationary pressures, rather than at a fixed semiannual pace.

The comments led to an increase in the yield on the two-year Japanese government bonds (JGB), which reached 1.830 per cent on Wednesday, its highest since 1995. Ueda confirmed that recent data suggests economic and price conditions are moving roughly in line with the BOJ's projections, but added that the central bank must pay particular attention to inflationary risks.