BOJ Hikes Interest Rates Amid Inflation Fears

The Bank of Japan (BOJ) is expected to hike interest rates by 25 basis points at its upcoming meeting on September 18, according to market expectations.

This move would bring rates to their highest levels since 1993 and mark the sixth rate hike since the BOJ ended ultra-loose policy in 2024.

The decision comes as the central bank seeks to quash sticky inflation and prolonged yen weakness. Japan's underlying inflation is back on track with the BOJ's 2% annual target, driven by higher oil and gas prices due to the Iran conflict.

However, producer price index inflation jumped to a three-and-a-half year high in August, indicating that producers will be able to pass on higher costs. This has led to bets on a rate hike to prevent price pressures from overshooting the target.