BOJ Flags Upside Price Risks, Ponders Faster Interest Rate Hikes

The Bank of Japan (BOJ) has signaled potential upside risks to inflation and may increase interest rates faster than expected, according to a recent summary from its July meeting.

One BOJ board member noted that underlying CPI inflation is approaching 2% and that greater consideration should be given to upside price risks. This could result in faster policy interest rate hikes than market expectations.

The BOJ held its policy rate at 1% last month, but signaled a possible increase by September, citing the impact of the weak yen on prices and growth.

Market players are pricing in a two-thirds chance of a move in September, with a possibility of a move by October at 96%.