BOJ Hikes Interest Rates by Quarter-Point Amid Inflation Pressures

The Bank of Japan (BOJ) is expected to raise interest rates by a quarter-point at its upcoming policy meeting on September 17-18, according to people familiar with the central bank's thinking.

Despite growing inflation pressures from a weak yen, rising import costs, and a tight labor market, officials see little reason to stage a surprise 50-basis-point hike, which could be seen as a sign of desperation and fuel fears about the BOJ being behind the curve.

Nobuyasu Atago, a former BOJ official now serving as chief economist at Rakuten Securities Economic Research Institute, said, 'Doing a 50-point hike could be seen as a sign of the BOJ's desperation and put the market's focus on the risk of it being behind the curve.'

The BOJ is considering accelerating its tightening pace to roughly once a quarter, but two sources noted that recent data has not shown inflation accelerating sharply enough to warrant an outsized move.