BOJ Considers Faster Rate Hikes Amid Inflation Risks

The Bank of Japan (BOJ) is considering a faster pace of interest rate hikes in response to growing inflation risks. A summary of opinions at their July meeting showed that at least three board members believed the BOJ could raise rates more quickly than its current pace of roughly two increases a year.

This hawkish tone reinforces market expectations that the BOJ will raise rates as soon as September, following joint intervention by Tokyo and Washington to prop up the yen. The BOJ's case for a rate hike strengthened after policymakers argued for a more forceful response to mounting inflation risks.

Several board members called for a nimble approach to raising rates, citing heightening inflation expectations and still-accommodative financial conditions. One member said that the risk of waiting is no longer marginal and that the pace of rate hikes could be faster than markets expect.