BOJ Governor Hints at September Rate Hike Amid Inflation Concerns

Bank of Japan (BOJ) Governor Kazuo Ueda hinted at a potential interest rate hike in September, citing inflationary risks as a key concern. Speaking after the G-20 finance leaders' gathering in Asheville, North Carolina, Ueda said that the BOJ will debate raising rates, including in September, to assess whether the likelihood of its economic scenario materialising is increasing and whether upside price risks are growing.

Ueda emphasized the need for careful consideration, given that interest rates have already been raised five times since the beginning of this year. He also highlighted the importance of paying attention to inflationary risks, particularly those related to the Middle East conflict, robust AI-related demand, and a weak yen.

Hawkish BOJ board member Hajime Takata added to the hawkish sentiment by suggesting that the central bank should raise rates nimbly in response to inflationary pressures. This view helped lift the yield on two-year Japanese government bonds (JGB) to 1.830%, its highest level since 1995.