BOJ Expected to Raise Key Rate to 1.25% Amid Intensifying Inflation Risks

The Bank of Japan is likely to raise its key interest rate by 25 basis points next week, bringing it to 1.25%, a three-decade high.

This decision is expected at the September 17-18 meeting and may signal that the pace of monetary policy tightening is accelerating.

The country's economy is gradually recovering, while price pressures are intensifying, with core inflation approaching 2%.

Even after a possible rate increase to 1.25%, financial conditions in Japan are expected to remain sufficiently accommodative, but the effects of the currency's previous weakness and renewed rise in fuel prices will continue to fuel inflation concerns.