BOJ Expected to Raise Interest Rates Again in September

The Bank of Japan (BOJ) is expected to raise its key interest rate more quickly than previously anticipated, according to a Reuters poll. A majority of economists, 57%, believe the BOJ will increase rates again in September, with some predicting it could reach as high as 1.5% by end-October or December.

The move is seen as a response to growing concerns over inflation and the persistent selling pressure on the yen. The Japanese central bank raised rates to a three-decade high of 1% in June, but economists are now warning that further action may be needed to prevent market instability.

Ayako Fujita, chief Japan economist at JPMorgan Securities, said 'an early policy adjustment has become unavoidable' due to the market's expectation of a rate hike. Nearly two-thirds of analysts (35 of 54) expect the policy rate to reach at least 1.5% by end-March next year, three months earlier than predicted in July.

The BOJ's decision to raise rates is also seen as a response to Prime Minister Sanae Takaichi's fiscal policy, which has contributed to yen weakness and raised inflation expectations.