BOJ Faces Pressure to Hike Rates as Wholesale Inflation Stays High

Japan's wholesale inflation remained high in August, according to data released by the Bank of Japan. The producer price index rose 7.6% from a year earlier, beating market forecasts for a 7.4% increase.

The BOJ had signaled a strong chance of a rate hike due to mounting price pressures and yen weakness. Analysts polled by Reuters expect the central bank to raise interest rates to 1.25% next week and then to 1.75% in the second quarter of 2027.

BOJ Governor Kazuo Ueda has been closely watching wholesale inflation for clues on the degree to which firms can pass on costs to households.