BOJ Governor Hints at Possible Rate Hike in September

The Bank of Japan (BOJ) may raise interest rates in September, according to its governor Kazuo Ueda. He signaled a strong chance of a hike this month while emphasizing that the BOJ would focus on whether inflationary risks are heightening. The remarks came after US Treasury Secretary Scott Bessent met with Ueda and called for 'decisive' monetary steps to combat inflation.

Ueda said the BOJ would assess the cumulative impact of previous rate increases, which have already reached 1% this year. He also mentioned that upside price risks from factors such as the Middle East conflict, robust AI-related demand, and a weak yen would be scrutinized. The BOJ raised interest rates to 31-year highs in June and kept them steady in July, signaling a near-term hike due to mounting price pressures.

Hawkish BOJ board member Hajime Takata said the BOJ should raise rates nimbly in response to inflationary pressures, rather than at a fixed semiannual pace. This view helped lift the yield on two-year Japanese government bonds (JPY) to 1.830%, the highest since 1995.