BOJ Governor Hints at September Rate Hike Amid Inflation Risks
The Governor of the Bank of Japan, Kazuo Ueda, hinted at the possibility of a September rate hike during a recent news conference. He emphasized that the central bank will debate raising interest rates this month, focusing on whether inflationary risks are increasing. This decision comes after a meeting with Treasury Secretary Scott Bessent, who called for 'decisive' monetary steps to combat the weak yen.
Ueda stated that the BOJ will assess the cumulative impact of previous rate increases and evaluate upside price risks from various factors, including the Middle East conflict and robust AI-related demand. He also highlighted the importance of monitoring inflationary pressures and potential risks of an inflation overshoot.
Hawkish BOJ board member Hajime Takata echoed similar sentiments in a separate speech, suggesting that the central bank should raise rates nimbly to respond to inflationary pressures. The comments from both Ueda and Takata have led to a rise in Japanese government bond yields, with the two-year JGB yield reaching 1.830% on Wednesday, its highest level since 1995.