BOJ Considers Rate Hike Amid Rising Inflation Risks and Weak Yen

Japan's central bank is considering raising interest rates at its September meeting after Governor Kazuo Ueda signaled that policymakers will closely assess rising inflation risks, a weak yen, and global economic conditions. The BOJ has already raised rates five times this year.

The recent increase in Japanese bond yields to multi-decade highs, with the 10-year JGB yield reaching 3% for the first time since 1996, suggests that markets are increasingly pricing in a rate hike. Ueda confirmed that he had met U.S. Treasury Secretary Scott Bessent on Sunday but declined to disclose details of their discussions.

Hawkish BOJ board member Hajime Takata also reinforced expectations of further tightening by arguing that the central bank should respond flexibly to inflationary pressures rather than follow a predetermined schedule for rate increases.