BOJ Governor Hints at September Rate Hike Amid Inflation Risks

The Governor of the Bank of Japan (BOJ), Kazuo Ueda, has hinted at the possibility of another interest rate hike in September. In a recent speech, he emphasized the need for vigilance regarding inflationary risks and potential upside price pressures. The BOJ raised its benchmark interest rate to 1% in June, marking a 31-year high.

Ueda's comments come after a meeting with US Treasury Secretary Scott Bessent, who urged Japan to take 'decisive' monetary steps to combat the weak yen. Ueda noted that inflationary risks include upside price pressures from the Middle East conflict and robust AI-related demand. He also mentioned the impact of a weak yen on prices.

The BOJ is expected to meet again on September 17-18, and markets are already pricing in a high chance of another rate hike this month. The two-year Japanese government bond yield has risen to its highest level since 1995, reaching 1.83%.