BOJ Eyes September Rate Hike Amid Deteriorating Price Pressures
The Bank of Japan (BOJ) is set to raise interest rates as soon as September, according to three sources familiar with its thinking. This move would reflect the BOJ's growing alarm over price pressures from the Middle East conflict, strong global AI demand, and the yen's downtrend.
The two-year Japanese government bond yield rebounded after Reuters initially reported the central bank's deliberations, while the five-year yield rose to a record high. The BOJ has raised interest rates at a pace of roughly twice a year since exiting a massive stimulus in 2024, including a 1% rate hike in June.
BOJ Governor Kazuo Ueda said he would take into account the board's growing alarm over inflation risks in chairing future meetings. The BOJ may accelerate rate hikes if financial conditions are deemed too loose, according to sources.